Ampio Pharmaceuticals
Annual Report 2018

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KAmpio Pharmaceuticals, Inc. - AMPEFiled: March 18, 2019 (period: December 31, 2018)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10‑K (Mark One)☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 001‑35182 AMPIO PHARMACEUTICALS, INC.(www.ampiopharma.com)NYSE American: AMPE Delaware26‑0179592(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification Number) 373 Inverness ParkwaySuite 200Englewood, Colorado80112(Address of principal executive offices)(Zip Code) (720) 437‑6500(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registeredCommon Stock, par value $.0001 per shareNYSE American Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☒Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No ☒Indicate by a check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofthe Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to thisForm 10‑K ☒Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (check one): Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated Filer ☐ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of common stock held by non-affiliates of the Registrant as of June 30, 2018 was $174.5 million based on the closing price of $2.20as of that date.Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: As of March 1, 2019, 111,127,878shares of common stock were outstanding. Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTABLE OF CONTENTS Page PART I Item 1 BUSINESS4Item 1A RISK FACTORS13Item 1B UNRESOLVED STAFF COMMENTS29Item 2 PROPERTIES29Item 3 LEGAL PROCEEDINGS29Item 4 MINE SAFETY DISCLOSURES30 PART II Item 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES30Item 6 SELECTED FINANCIAL DATA31Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS31Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK35Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA35Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE35Item 9A CONTROLS AND PROCEDURES36Item 9B OTHER INFORMATION37 PART III Item 10 DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE38Item 11 EXECUTIVE COMPENSATION49Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS54Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE55Item 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES56 PART IV Item 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES57SIGNATURES 61 Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1This Report on Form 10‑K refers to trademarks, such as Ampio and Ampion, which are protected under applicableintellectual property laws and are our property. This Form 10‑K also contains trademarks, service marks, copyrights and tradenames of other companies which are the property of their respective owners. Solely for convenience, our trademarks andtradenames referred to in this Form 10‑K may appear without the or ™ symbols, but such references are not intended toindicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks andtradenames.Unless otherwise indicated or unless the context otherwise requires, references in this Form 10‑K to the “Company,”“Ampio,” “we,” “us,” or “our” are to Ampio Pharmaceuticals, Inc.2 ®Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATAForward Looking StatementsThis Annual Report on Form 10‑K, or Annual Report, includes forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or theExchange Act. All statements other than statements of historical facts contained in this Annual Report, including statementsregarding our anticipated future clinical and regulatory events, future financial position, business strategy and plans andobjectives of management for future operations, are forward-looking statements. Forward looking statements are generallywritten in the future tense and/or are preceded by words such as “may,” “will,” “should,” “forecast,” “could,” “expect,”“suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” or similar words, or the negatives of such termsor other variations on such terms or comparable terminology. Such forward-looking statements include, without limitation,statements regarding the anticipated start dates, durations and completion dates, as well as the potential future results, of ourongoing and future clinical trials, the anticipated designs of our future clinical trials, anticipated future regulatorysubmissions and events, regulatory responses to our proposals, the potential future commercialization of our productcandidate, Ampion, our anticipated future cash position and future events under our current and potential futurecollaborations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, includingwithout limitation the risks described in “Risk Factors” in Part I, Item 1A of this Annual Report. These risks are notexhaustive. Other sections of this Annual Report include additional factors that could adversely impact our business andfinancial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factorsemerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact ofall factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differmaterially from those contained in any forward-looking statements. You should not rely upon forward-looking statements aspredictions of future events. We cannot assure you that the events and circumstances reflected in the forward-lookingstatements will be achieved or occur and actual results could differ materially from those projected in the forward-lookingstatements. We assume no obligation to update or supplement forward-looking statements.We obtained statistical data, market and product data, and forecasts used throughout this Form 10‑K from marketresearch, publicly available information and industry publications. While we believe that the statistical data, industry dataand forecasts and market research are reliable, we have not independently verified the data, and we do not make anyrepresentation as to the accuracy of the information.3 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC. PART I Item 1.BusinessOverviewOur focus is on developing Ampion, which is a compound that decreases inflammation by inhibiting specific pro-inflammatory compounds.Ampion has advanced through late-stage clinical trials in the United States. The U.S. Food and Drug Administration, or FDA,provided guidance that we should complete a trial of Kellgren Lawrence Grade 4, or KL 4, osteoarthritis patients withconcurrent controls that would be carried out under a Special Protocol Assessment, or SPA, or otherwise with FDA feedback.An SPA is a process in which sponsors reach agreement with the FDA on the design and size of a proposed clinical trial toassure a study adequately addresses scientific and regulatory requirements to support marketing approval. However, the FDAstill reserves the right to make changes at a future time which could include requiring additional trials.AMPIONAmpion for Osteoarthritis and Other Inflammatory ConditionsAmpion is the < 5 kDa ultrafiltrate of 5% Human Serum Albumin, or HSA, an FDA, approved biologic product. Ampion is anon-steroidal, low molecular weight, anti-inflammatory biologic, which has the potential to be used in a wide variety ofacute and chronic inflammatory conditions, as well as immune-mediated diseases. Ampion and its known components havedemonstrated anti-inflammatory activity which supports the mechanism of action.We are currently developing Ampion as an intra-articular injection to treat the signs and symptoms of severe osteoarthritis ofthe knee, or OAK, which is a growing epidemic in the United States. OAK is a progressive disease characterized by gradualdegradation and loss of cartilage due to inflammation of the soft tissue and bony structures of the knee joint. Progression ofthe most severe form of OAK leaves patients with little to no treatment options other than a total knee arthroplasty. The FDAhas stated that severe OAK is an ‘unmet medical need’ with no licensed therapies for this indication. While we believe thatAmpion could treat this ‘unmet medical need’, our ability to market this product is subject to FDA approval.Market OpportunityOsteoarthritis, or OA, is the most common form of arthritis, affecting over 30 million people in the United States. It is aprogressive disorder of the joints involving degradation of the intra-articular cartilage, joint lining, ligaments, and bone.Certain risk factors in conjunction with natural wear and tear lead to the breakdown of cartilage. Osteoarthritis is caused byinflammation of the soft tissue and bony structures of the joint, which worsens over time and leads to progressive thinning ofarticular cartilage. Other progressive effects include narrowing of the joint space, synovial membrane thickening, osteophyteformation and increased density of the subchondral bone. The global market size for treatments that currently addressmoderate to moderately severe OA was valued at approximately $3.0 billion in 2016 and is expected to grow with acompound annual growth rate of 9.04% through 2025. The global demand for osteoarthritis of the knee treatment isexpected to be fueled by aging demographics and increased awareness of treatment options. Despite the size and growth ofthe osteoarthritis of the knee market, only a few treatment options currently exist, especially in the severely diseased patientpopulation.Ampion DevelopmentSince our inception, we have conducted multiple clinical trials and have advanced through late-stage clinical trials in theUnited States, initially under the guidance of the FDA’s Office of Blood Research and Review, or OBRR, and most recentlyunder the guidance of the FDA’s Office of Tissues and Advanced Therapies, or OTAT. 4 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsStudy AP-003-A was a U.S. multicenter, randomized, double-blind trial of 329 patients who were randomized 1:1 to receiveAmpion or saline control via intra-articular injection. The study showed a statistically significant reduction in pain comparedto the control, with an average of greater than 40% reduction in pain from baseline at 12 weeks. Patients who receivedAmpion also showed a significant improvement in function and quality of life (quality of life was assessed using the PatientGlobal Assessment, or PGA) compared to patients who received the saline control at 12 weeks. Furthermore, the trial includedseverely diseased patients (defined as KL 4). From this patient population, those patients who received Ampion had asignificantly greater reduction in pain than those who received the saline control. Ampion was well tolerated with minimaladverse events reported across the Ampion and saline groups in the study. There were no drug-related serious adverse events.The trial design of AP-003-C was initiated while we were under the guidance of OBRR and modified when guidance wastransferred to OTAT in 2017. The study evaluated the responder rate of Ampion-treated patients as defined by theOsteoarthritis Research Society International (“OARSI”) Standing Committee for Clinical Trials Response Criteria Initiative(OMERACT), which included pain, function, and PGA in support of a label for the treatment of the signs and symptoms ofsevere OAK at 12 weeks. Both OBRR and OTAT have confirmed that our successful pivotal phase III clinical trial, AP-003-A, was adequate and well-controlled and provided evidence of the effectiveness of Ampion and can contribute to the substantial evidence ofeffectiveness necessary for the approval of a Biologics License Application, or BLA. However, OTAT does not consider theAP-003-C trial to be an adequate and well-controlled pivotal trial and provided guidance that we should complete anadditional trial of KL 4 osteoarthritis patients with concurrent controls that would be carried out under an SPA to obtain FDAconcurrence on the trial design. An SPA would provide a written agreement between us and the FDA indicating concurrenceby the FDA on the adequacy and acceptability of critical elements of the overall protocol design for a study intended tosupport a future marketing application. The existence of an SPA agreement does not guarantee that the FDA will accept anew BLA or that the trial results will be adequate to support marketing approval. Those issues are addressed during thereview of a submitted application and are determined based on the adequacy of the overall submission. We do not plan tobegin our clinical trial until we are awarded an SPA from the FDA. Should the FDA award the SPA, we plan to commenceenrollment of patients. Even if this proposed trial is completed, the FDA may require additional clinical trials in the future.We cannot ensure that the data derived from a subsequent trial or trials will be sufficient to support marketing approval forAmpion. Ampion Manufacturing FacilityIn December 2013, we entered into a ten-year lease of a multi-purpose facility containing approximately 19,000 square feet.This facility includes a clean room to manufacture Ampion, research laboratories and our corporate offices. Ampionmanufactured at our facilities is used in our clinical trials.We moved into this manufacturing facility in the summer of 2014 and it was placed into service during the first quarter of2016. Since then, we have implemented a quality system, validated the facility for human-use products and producedAmpion. OptinaIn 2018, we reviewed our product portfolio and made the decision to delay the development of Optina or any other productin an effort to focus available resources on the development for Ampion. CompetitionThe biotechnology and pharmaceutical industries are highly competitive and subject to significant and rapid technologicalchange as researchers learn more about diseases and develop new technologies and treatments. Significant competitivefactors in our industry include product efficacy and safety; quality and breadth of an organization’s technology; skill of anorganization’s employees and its ability to recruit and retain key employees; timing and scope of regulatory approvals;government reimbursement rates for, and the average selling price of, products; the availability of raw materials and qualifiedmanufacturing capacity; manufacturing costs; intellectual property and patent rights and their protection; and sales andmarketing capabilities.5 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf we develop a successful product, we cannot guarantee it will be clinically superior or scientifically preferable to productsdeveloped or introduced by our competitors.Among our smaller competitors, many of these companies have established co-development and collaboration relationshipswith larger pharmaceutical and biotechnology firms, which may make it more difficult for us to attract strategic partners. Ourcurrent and potential competitors include major multinational pharmaceutical companies, biotechnology firms, universitiesand research institutions. Some of these companies and institutions, either alone or together with their collaborators, havesubstantially greater financial resources and larger research and development staffs than do we. In addition, many of thesecompetitors, either alone or together with their collaborators, have significantly greater experience than us in discovering,developing, manufacturing, and marketing pharmaceutical products. If one of our competitors realizes a significantadvancement in a pharmaceutical drug or biologic that addresses the disease targeted by Ampion, our product could berendered uncompetitive or obsolete.Our competitors may also succeed in obtaining FDA or other regulatory approvals for their product candidates more rapidlythan us, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights. Marketacceptance of Ampion will depend on a number of factors, including: (i) potential advantages over existing or alternativetherapies, (ii) the actual or perceived safety of similar classes of products, (iii) the effectiveness of sales, marketing, anddistribution capabilities and (iv) the scope of any approval provided by the FDA or foreign regulatory authorities.Although we believe Ampion possesses attractive attributes, we cannot assure that it will achieve regulatory or marketacceptance, or that we will be able to compete effectively in the pharmaceutical drug markets. If Ampion fails to gainregulatory approvals and acceptance in its intended markets, we may not generate meaningful revenues or achieveprofitability.The available treatments for osteoarthritis of the knee include:·oral non-steroidal anti-inflammatory agents;·opioids;·pain patches;·intra-articular, or IA, corticosteroids injections;·IA hyaluronic acid, or HA, injections;·Acetaminophen;·Capsaicin;·Serotonin norepinephrine reuptake inhibitors (SNRIs);·Platelet rich plasma (PRP);·Total knee replacement (TKR); and·Anti-NGF antibody products such as tanezumab, fulranumab and fasinumab.The American Academy of Orthopedic Surgeons, or AAOS, issued their second edition of clinical practice guidelines for thetreatment of osteoarthritis of the knee in May 2013. The AAOS was unable to recommend for or against the use of intra-articular corticosteroid injections as studies designed to indicate efficacy are inconclusive. Further, the AAOS was alsounable to recommend for or against the use of acetaminophen, opioids, or pain patches as the efficacy studies in this area arealso inconclusive. Most importantly, the AAOS does not recommend (with a strong ‘strength of recommendation’) the use ofhyaluronic acid injections as, in the AAOS’ assessment, the clinical evidence does not support their use. This clinicalpractice guideline emphasizes the ‘unmet medical need’ for osteoarthritis of the knee6 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsgiven the few accepted and available treatments. We believe Ampion is a novel treatment option that, if approved, would bethe first non-steroidal, non-hyaluronic-based intra-articular treatment available for pain due to osteoarthritis of the knee.Government RegulationFDA Approval ProcessIn the United States, pharmaceutical products are subject to extensive regulation by the Food and Drug Administration, orFDA. The Federal Food, Drug, and Cosmetic Act, or FDCA, and other federal and state statutes and regulations, govern,among other things, the research, development, testing, manufacture, storage, record keeping, approval, labeling, promotionand marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceuticalproducts. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative orjudicial sanctions, such as FDA refusal to approve a pending New Drug Application, or NDA, or Biologics LicenseApplication, or BLA, untitled or warning letters, product recalls, product seizures, total or partial suspension of production ordistribution, injunctions, fines, civil penalties, and criminal prosecution.Pharmaceutical and biologic product development in the United States typically involves:·the performance of satisfactory preclinical laboratory and animal studies under the FDA’s Good LaboratoryPractices, or GLPs, regulation;·the development and demonstration of manufacturing processes, which conform to the FDA mandated current GoodManufacturing Practices, or cGMP, a quality system regulating manufacturing;·the submission and acceptance of an Investigational New Drug, or IND, application which must become effectivebefore human clinical trials may begin in the United States;·obtaining the approval of Institutional Review Boards, or IRBs, at each site where we plan to conduct a clinical trialto protect the welfare and rights of human subjects in clinical trials;·adequate and well-controlled clinical trials to establish the safety and effectiveness of the biologic for eachindication for which FDA approval is sought; and·the submission to the FDA for review and approval of an NDA or a BLA.Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may varysubstantially based upon the type, complexity, and novelty of the product or disease. Preclinical tests generally includelaboratory evaluation of a product candidate, its chemistry, formulation, stability and toxicity, as well as certain animalstudies to assess its potential safety and efficacy. Results of these preclinical tests, together with manufacturing information(in compliance with GLP and cGMP), analytical data and the clinical trial protocol (detailing the objectives of the trial, theparameters to be used in monitoring safety, and the effectiveness criteria to be evaluated), must be submitted to the FDA aspart of an IND, which must become effective before human clinical trials can begin.An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30‑day time period,raises concerns or questions about the intended conduct of the trial and imposes what is referred to as a clinical hold.Preclinical studies generally take several years to complete, and there is no guarantee that an IND based on those studies willbecome effective, allowing clinical testing to begin. In addition to the FDA review of an IND, each medical site that desiresto participate in a proposed clinical trial must have the protocol reviewed and approved by an independent IRB or EthicsCommittee, or EC, for sites located outside of the United States. The IRB considers, among other things, ethical factors, andthe selection and safety of human subjects. Clinical trials must be conducted in accordance with the FDA’s Good ClinicalPractices, or GCP, requirements. The FDA and/or IRB/EC may order the temporary, or permanent, discontinuation of aclinical trial or a specific clinical trial site to be halted at any time, or impose other sanctions for failure to comply withrequirements under the appropriate entity jurisdiction.7 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsClinical trials to support NDAs or BLAs for marketing approval are typically conducted in three sequential phases, but thephases may overlap. Ampio is seeking a BLA for Ampion. In Phase I clinical trials, a product candidate is typicallyintroduced either into healthy human subjects or patients with the medical condition for which the new drug is intended tobe used. The main purpose of the trial is to assess a product candidate’s safety and the ability of the human body to toleratethe product candidate. Phase I clinical trials generally include less than 50 subjects or patients. During Phase II trials, aproduct candidate is studied in an exploratory trial or trials in a limited number of patients with the disease or medicalcondition for which it is intended to be used in order to: (i) further identify any possible adverse side effects and safety risks,(ii) assess the preliminary or potential efficacy of the product candidate for specific target diseases or medical conditions, and(iii) assess dosage tolerance and determine the optimal dose for Phase III trials. Phase III trials are generally undertaken todemonstrate clinical efficacy and to further test for safety in an expanded patient population with the goal of evaluating theoverall risk-benefit relationship of the product candidate. Phase III trials will generally be designed to reach a specific goal orendpoint, the achievement of which is intended to demonstrate the product candidate’s clinical efficacy and provideadequate information for labeling of the biologic.A drug being studied in clinical trials may be made available to individual patients in certain circumstances. Pursuant to the21st Century Cures Act, or Cures Act, which was signed into law in December 2016, the manufacturer of an investigationaldrug for a serious disease or condition is required to make available, such as by posting on its website, its policy onevaluating and responding to requests for individual patient access to such investigational drug. This requirement applies onthe later of 60 calendar days after the date of enactment of the Cures Act or the first initiation of a Phase II or Phase III trial ofthe investigational drug.After completion of clinical testing under an IND, a BLA is prepared and submitted to the FDA. FDA approval of the BLA isrequired before marketing of the product may begin in the United States. The BLA must include the results of all preclinical,clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, andcontrols. The cost of preparing and submitting a BLA is substantial. Under federal law, the submission of most BLAs aresubject to an application user fee, currently $2.6 million. However, the FDA will waive the application user fee for the firsthuman drug application that a small business or its affiliate submits for review. Small businesses are defined as businesseswith less than 500 employees, therefore Ampio is considered a small business. The manufacturer and/or sponsor under anapproved BLA are also subject to an annual program fee, currently $310,000. The annual program fee replaced the productand establishment user fees that the FDA charged in prior years. These fees typically increase annually.The FDA has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on theFDA’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is acceptedfor filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of BLAs. Mostsuch applications for standard biologic products are reviewed within ten months; most applications for priority biologics arereviewed in six months. The review process for both standard and priority review may be extended by the FDA for threeadditional months to consider certain late-submitted information, or information intended to clarify information alreadyprovided in the submission. The FDA may also refer applications for novel biologic products, or biologic products whichpresent difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes cliniciansand other experts, for review, evaluation, and a recommendation as to whether the application should be approved. The FDAis not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Beforeapproving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, theFDA will inspect the facility or the facilities where the biologic is manufactured. The FDA will not approve the productunless compliance with cGMP is satisfactory and the BLA contains data that provide substantial evidence that the biologic issafe and effective in the indication studied.After the FDA evaluates the BLA and the manufacturing facilities, it issues either an approval letter or a complete responseletter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additionaltesting or information in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressedto the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter. The FDA has committed toreviewing such resubmissions in two or six months depending on the type of information included. An approval letterauthorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition ofthe BLA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefitsof the biologic outweigh the potential risks. REMS can include medication guides, communication plans for healthcareprofessionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training orcertification for prescribing or dispensing,8 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsdispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for aREMS can materially affect the potential market and profitability of the drug. Product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawnif compliance with regulatory standards is not maintained or problems are identified following initial marketing.There are accelerated review processes at the FDA, including Fast Track Designation and Accelerated Approval, none ofwhich Ampio is seeking.Foreign Regulatory ApprovalOutside of the United States, our ability to market Ampion will be contingent upon receiving marketing authorizations fromthe appropriate foreign regulatory authorities, whether or not FDA approval has been obtained. The foreign regulatoryapproval process in most industrialized countries generally encompasses risks similar to those we will encounter in the FDAapproval process. The requirements governing the conduct of clinical trials and marketing authorizations, and the timerequired to obtain the requisite approvals, may vary widely from country to country and differ from those required for FDAapproval.Under European Union, or EU, regulatory systems, marketing authorizations may be submitted either under a centralized ordecentralized procedure.The centralized procedure provides for the grant of a single marketing authorization that is valid for all EU member states.The centralized procedure is compulsory for human medicines that are derived from biotechnology processes, such as geneticengineering, that contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer,diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions, and officially designatedorphan medicines. For medicines that do not fall within these categories, an applicant has the option of submitting anapplication for a centralized marketing authorization to the European Commission following a favorable opinion by theEuropean Medicines Agency, or EMA, as long as the medicine concerned is a significant therapeutic, scientific or technicalinnovation, or if its authorization would be in the interest of public health.The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holderof a national marketing authorization may submit an application to the remaining member states. Within 90 days ofreceiving the applications and assessment report, each member state must decide whether to recognize approval. The mutualrecognition process results in separate national marketing authorizations in the reference member state and each concernedmember state. We will seek to choose the appropriate route of European regulatory filing in an attempt to accomplish themost rapid regulatory approvals for Ampion when ready for review. However, the chosen regulatory strategy may not secureregulatory approval of the chosen product indications. In addition, these approvals, if obtained, may take longer thananticipated. We can provide no assurance that Ampion will prove to be safe or effective, will receive required regulatoryapprovals, or will be successfully commercialized.Biosimilars and ExclusivityThe Patient Protection and Affordable Care Act, or Affordable Care Act, signed into law on March 23, 2010, includes asubtitle called the Biologics Price Competition and Innovation Act of 2009, which created an abbreviated approval pathwayfor biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.This amendment to the Public Health Services Act attempts to minimize duplicative testing. Biosimilarity, requires that therecan be no clinically meaningful differences between the biological product and the reference product in terms of safety,purity, and potency, and can be shown through analytical studies, animal studies, and a clinical trial or trials.Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it canbe expected to produce the same clinical results as the reference product and, for products administered multiple times. Thebiologic and the reference biologic may be switched after one has been previously administered without increasing safetyrisks or risks of diminished efficacy relative to exclusive use of the reference biologic.A novel biologic is granted twelve years of exclusivity from the time of first licensure of the reference product. The firstbiologic product submitted under the abbreviated approval pathway that is determined to be interchangeable with thereference product has exclusivity against other biologics submitting under the abbreviated approval pathway for the9 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentslesser of (i) one year after the first commercial marketing, (ii) eighteen months after approval if there is no legal challenge,(iii) eighteen months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if anapplication has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the42‑month period.Post-Approval RegulationIf a product candidate receives regulatory approval, the approval is typically limited to specific clinical indications.Furthermore, after regulatory approval is obtained, subsequent discovery of previously unknown problems with a productmay result in restrictions on its use or complete withdrawal of the product from the market. Any FDA-approved productsmanufactured or distributed by us are subject to continuing regulation by the FDA, including record-keeping requirementsand reporting of adverse events or experiences. Further, biologic manufacturers and their subcontractors are required toregister their establishments with the FDA and state agencies, and are subject to periodic inspections by the FDA and stateagencies for compliance with cGMP, which impose rigorous procedural and documentation requirements upon us and ourcontract manufacturers. We cannot be certain that we or our present or future contract manufacturers or suppliers will be ableto comply with cGMP regulations and other FDA regulatory requirements. Failure to comply with these requirements mayresult in, among other things, total or partial suspension of production activities, failure of the FDA to grant approval formarketing, and withdrawal, suspension, or revocation of marketing approvals.If the FDA approves Ampion, we and the contract manufacturers of clinical supplies and commercial supplies must providecertain updated safety and efficacy information. Product changes, as well as certain changes in the manufacturing process orfacilities where the manufacturing occurs or other post-approval changes may necessitate additional FDA review andapproval. The labeling, advertising, promotion, marketing and distribution of a biologic product must also be in compliancewith FDA and Federal Trade Commission, or FTC, requirements which include, among others, standards and regulations fordirect-to-consumer advertising, industry sponsored scientific and educational activities, and promotional activitiesinvolving the Internet. In addition, we are prohibited from promoting our products off-label. The FDA and FTC have verybroad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance of awarning letter or untitled letter directing us to correct deviations from regulatory requirements and enforcement actions thatcan include seizures, fines, injunctions and criminal prosecution.Other Regulatory RequirementsWe are also subject to regulation by other regional, national, state and local agencies, including the U.S. Department ofJustice, the Office of Inspector General of the U.S. Department of Health and Human Services and other regulatory bodies.Our current and future partners are subject to many of the same requirements.In addition, we are subject to other regulations, including regulations under the Occupational Safety and Health Act,regulations promulgated by the U.S. Drug Enforcement Administration, the Toxic Substance Control Act, the ResourceConservation and Recovery Act, and regulations under other federal, state and local laws.Violations of any of the foregoing requirements could result in penalties being assessed against us.PrivacyMost health care providers, including research institutions from whom we or our partners obtain patient information, aresubject to privacy and security rules under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, andthe amendments to HIPAA under the Health Information Technology for Economic and Clinical Health Act, or HITECH.Additionally, strict personal privacy laws in other countries affect pharmaceutical companies’ activities in those countries.Such laws include the EU Directive 95/46/EC on the protection of individuals with regard to the processing of personal data,as well as individual EU Member States implementing additional laws. Although our clinical development efforts are notbarred by these privacy regulations, we could face substantial criminal penalties if we knowingly receive individuallyidentifiable health information from a health care provider that has not satisfied HIPAA’s or the EU’s disclosure standards.Failure by EU clinical trial partners to obey requirements of national laws on private personal data, including lawsimplementing the EU Data Protection Directive, might result in liability and/or adverse publicity.10 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsInformation SystemsWe believe that our Information Systems, or IS, capabilities are adequate to manage our core business. In addition, ourinternal controls related to IS are operating effectively.Intellectual Property SummaryAmpionIn 2018, we reviewed our patent portfolio relative to Ampion. We made the decision to focus available resources by limitingthe maintenance of patent protection for Ampion based on the relative importance of technologies covered by patents, thegeographic jurisdiction of patents and remaining patent term. This allowed us to reduce the overall number of patents whilemaintaining our strategic coverage. The portfolio primarily consists of seven families filed in the United States andthroughout the world. The first family includes U.S. patents and a European patent, validated and being maintained in Germany, Great Britain andFrance with claims relating to methods of treating inflammatory disease and compositions of matter comprisingdiketopiperazine derivatives, including aspartyl-alanyl diketopiperazine, or DA-DKP. This family also includes issuedpatents in China, Hong Kong, and Japan. The standard 20-year expiration for patents in this family is in 2021. The second family includes U.S. patents with claims directed to methods of treating inflammation and T-cell mediated orinflammatory diseases with compositions of matter comprising DA-DKP. This family also includes issued patents inAustralia, China, New Zealand, Singapore, Hong Kong, Israel, Japan, South Africa and a European patent (validated inGermany, Great Britain, France, Italy, and the Netherlands) and pending applications in the United States, Canada, China,and Hong Kong. The standard 20-year expiration for patents in this family is in 2024. The third family includes U.S. patents, a pending U.S. application, and issued patents in Australia, China, Eurasia (Russia),Israel, Japan, New Zealand, and Philippines and pending applications in Australia, Brazil, Canada, China, EPO, Hong Kong,Indonesia, Korea, Mexico, Malaysia, Singapore, United States, and South Africa. The claims in this family are directed to theuse of DA-DKP for the treatment of degenerative joint diseases. The standard 20-year expiration for patents in this family isin 2032. The fourth family includes a U.S. patent, a pending U.S. application and pending applications in Australia, Canada, China,EPO, Hong Kong, Japan, New Zealand with claims directed to the use of DA-DKP to mobilize, home, expand anddifferentiate stem cells in the treatment of subjects. The standard 20-year expiration for patents in this family is in 2034. The fifth family includes a U.S. patent, a pending U.S. application and pending applications in Australia, Canada, China,Europe, Hong Kong, Israel, Japan, Korea and Russia with claims directed to the use of DA-DKP for the treatment ofdegenerative joint diseases in a multi-dose treatment regimen. The standard 20-year expiration for patents in this family is in2035. The sixth family includes a pending U.S. application and pending applications in Europe and Hong Kong with claimsdirected to the use of DA-DKP in the absence of cyclooxygenase-2, or COX-2 antagonist treatment. The standard 20-yearexpiration for patents in this family will be in 2036. The seventh family includes a Patent Cooperation Treaty international application with claims directed to the use of N-acetyl-kynurenine for treatment of T-cell mediated diseases, degenerative joint disease and diseases mediated by plateletactivating factor and composition of matter. The standard 20-year expiration for patents in this family will be 2037. OptinaIn 2018, we reviewed our patent portfolio relative to Optina. We made the decision to delay the development of Optina andallow existing patents and applications to lapse by non-payment of annuities and maintenance fees and non-responses toactions in the future in an effort to focus available resources on patent protection for Ampion. 11 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsBarriers to Entry – GeneralWe also maintain trade secrets and proprietary know-how that we seek to protect through confidentiality and nondisclosureagreements. We expect to seek U.S. and foreign patent protection for our therapeutic product. These patents may not providemeaningful protection or adequate remedies in the event of unauthorized use or disclosure of confidential and proprietaryinformation. If we do not adequately protect our trade secrets and proprietary know-how, our competitive position andbusiness prospects could be materially harmed.The patent positions of companies such as ours involve complex legal and factual questions and, therefore, theirenforceability cannot be predicted with any certainty. Our issued and licensed patents, and those that may be issued to us inthe future, may be challenged, invalidated or circumvented, and the rights granted under the patents or licenses may notprovide us with meaningful protection or competitive advantages. Our competitors may independently develop similartechnologies or duplicate any technology developed by us, which could offset any advantages we might otherwise realizefrom our intellectual property. Furthermore, even if Ampion receives regulatory approval, the time required for development,testing, and regulatory review could mean that protection afforded to us by our patents may only remain in effect for a shortperiod after commercialization. The expiration of patents or license rights we hold could adversely affect our ability tosuccessfully commercialize our biologic, thus harming our operating results and financial position.We will be able to protect our proprietary intellectual property rights from unauthorized use by third parties only to theextent that such rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. If we mustlitigate to protect our intellectual property from infringement, we may incur substantial costs and our officers may be forcedto devote significant time to litigation-related matters. The laws of certain foreign countries do not protect intellectualproperty rights to the same extent as the laws of the United States.Our pending patent applications, or those we may file or license from third parties in the future, may not result in patentsbeing issued. Until a patent is issued, the claims covered by an application for patent may be narrowed or removed entirely,thus depriving us of adequate protection. As a result, we may face unanticipated competition, or conclude that without patentrights the risk of bringing Ampion to market exceeds the returns we are likely to obtain. We are generally aware of thescientific research being conducted in the areas in which we focus our research and development efforts, but patentapplications filed by others are maintained in secrecy for at least 18 months and, in some cases in the United States, until thepatent is issued. The publication of discoveries in scientific literature often occurs substantially later than the date on whichthe underlying discoveries were made. As a result, it is possible that patent applications for products similar to our biologiccandidate may have already been filed by others without our knowledge. The biotechnology and pharmaceutical industriesare characterized by extensive litigation regarding patents and other intellectual property rights, and it is possible thatdevelopment of Ampion could be challenged by other pharmaceutical or biotechnology companies. If we become involvedin litigation concerning the enforceability, scope and validity of the proprietary rights of others, we may incur significantlitigation or licensing expenses, be prevented from further developing or commercializing Ampion, be required to seeklicenses that may not be available from third parties on commercially acceptable terms, if at all, or subject us tocompensatory or punitive damage awards. Any of these consequences could materially harm our business.Research and DevelopmentFor the years ended December 31, 2018 and 2017, we recorded $6.8 million and $10.4 million, respectively, of research anddevelopment expenses. Research and development expenses represented 61.0% and 67.0% of total operating expenses inthe years ended December 31, 2018 and 2017, respectively. More information regarding our research and developmentactivities can be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” under Item 7 of this Annual Report.Compliance with Environmental LawsWe believe we are in compliance with current environmental protection requirements that apply to us or our business. Costsattributable to environmental compliance are not currently material.12 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsProduct Liability and InsuranceThe development, manufacture and sale of pharmaceutical products involve inherent risks of adverse side effects or reactionsthat can cause bodily injury or even death. Ampion, if we succeed in commercializing, could adversely affect consumerseven after obtaining regulatory approval and, if so, we could be required to withdraw our product from the market or besubject to administrative or other proceedings. We obtain clinical trial liability coverage for human clinical trials, and willobtain appropriate product liability insurance coverage for Ampion that we manufacture and sell for human consumption.The amount, nature and pricing of such insurance coverage will likely vary due to a number of factors such as Ampion’sclinical profile, efficacy and safety record, and other characteristics. We may not be able to obtain sufficient insurancecoverage to address our exposure to product recall or liability actions, or the cost of that coverage may be such that we willbe limited in the types or amount of coverage we can obtain. Any uninsured loss we suffer could materially and adverselyaffect our business and financial position.EmployeesAs of March 1, 2019, we had 22 full-time employees and utilized the services of a number of consultants on a temporarybasis.Available InformationOur principal executive offices are located at 373 Inverness Parkway, Suite 200, Englewood, Colorado 80112 USA, and ourphone number is (720) 437‑6500.We file our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, electronically with the U.S.Securities and Exchange Commission, or the SEC. The SEC maintains an Internet site that contains reports, proxy andinformation statements, and other information regarding issuers that file electronically with the SEC. The address of that siteis http://www.sec.gov.You may obtain a free copy of our annual reports on Form 10-K, quarterly reports on From 10-Q, current reports on Form 8-Kand amendments to those reports on our website at http://www.ampiopharma.com on the earliest practicable date followingthe filing with the SEC. Information found on our website is not incorporated by reference into this report.Our Code of Conduct and Ethics and the charters of our Nominating and Governance Committee, Audit Committee,Compensation Committee and Disclosure Committee of our Board of Directors may be accessed within the InvestorRelations section of our website. Amendments and waivers of the Code of Conduct and Ethics will also be disclosed withinfour business days of issuance on the website. Information found on our website is neither part of this annual report onForm 10‑K nor any other report filed with the SEC. Item 1A.Risk FactorsRisks Related to Our BusinessManagement has performed an analysis of our ability to continue as a going concern. In addition, our independentregistered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern.Based on their assessment, management has raised concerns about our ability to continue as a going concern. In addition, ourindependent registered public accounting firm expressed substantial doubt as to our ability to continue as a going concern intheir report accompanying our audited financial statements. A “going concern” opinion could impair our ability to financeour operations through the sale of debt or equity securities or through bank financing. We have raised $139.0 million in netproceeds from equity financing in the past ten years and believe that we will be able to raise additional equity or debtfinancing in the future but the financing could be extremely dilutive to our current shareholders. Our ability to continue as agoing concern will depend on our ability to obtain additional financing. Additional capital may not be available onreasonable terms, or at all. If adequate financing is not available, we would be required to terminate or significantly curtailour operations, or enter into arrangements with collaborative partners or others that may require us to relinquish rights tocertain aspects of Ampion, or potential markets that we would not otherwise relinquish.13 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf we are unable to achieve these goals, our business would be jeopardized and we may not be able to continue operations.We have incurred significant losses since inception, expect to incur net losses for at least the next several years and maynever achieve or sustain profitability.We are a development stage biopharmaceutical company that has not generated revenues or profits and have thereforeincurred significant net losses totaling $171.0 million since our inception in December 2008. We expect to generateoperating losses for the foreseeable future, but intend to try to limit the extent of these losses by entering into licensing, co-development or collaboration agreements with one or more strategic partners, which may provide us with potential milestonepayments and royalties. Those arrangements, if obtained, will be our primary source of revenues for the coming years. Wecannot be certain that any licensing, co-development or collaboration arrangements will be obtained, or that the terms ofthose arrangements will result in us receiving material revenues. To obtain revenues from Ampion, we must succeed, eitheralone or with others, in a range of challenging activities, including completing clinical trials, obtaining marketing approval,manufacturing, marketing and selling, satisfying any post-marketing requirements and obtaining reimbursement for ourproduct from private insurance or government payors. We, and our collaborators, may never succeed in these activities and,even if we do, or one of our collaborators does, we may never generate revenues that are significant enough to achieveprofitability.We will need substantial additional capital to fund our operations. If we do not obtain the capital necessary to fund ouroperations, we will be unable to successfully develop, obtain regulatory approval of, and commercialize Ampion and mayneed to cease operations.Developing pharmaceutical products is a very time-consuming, expensive and uncertain process that takes years to complete.We expect our expenses could increase in connection with our ongoing activities, particularly as we initiate new clinicaltrials, prepare to file our Ampion BLA with the FDA and seek marketing approval for Ampion.As of December 31, 2018, we had $7.6 million of cash which we expect can fund our operation into the second quarter of2019. To operate as planned in fiscal 2019 and into 2020 we will need to raise at least $16.0 million through equityofferings, debt or other financing tools.Our future capital requirements will depend on and could increase significantly as a result of many factors including:·progress in and the costs of our clinical trials and research and development;·progress in and the costs of applying for regulatory approval for Ampion;·the costs of sustaining our corporate overhead requirements and hiring and retaining necessary personnel;·the scope, prioritization and number of our research and development programs;·the achievement of milestones or occurrence of other developments that trigger payments under anycollaboration agreements we obtain;·the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs underfuture collaboration agreements, if any;·the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual propertyrights;·the costs of securing manufacturing arrangements for commercial production; and·the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory clearances tomarket Ampion.14 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUntil we can generate significant continuing revenues, we expect to satisfy our future cash needs through collaborationarrangements, private or public sales of our securities, including under our “at-the-market”, or ATM, equity program, debtfinancings, or by licensing Ampion. We cannot be certain that additional funding will be available to us on acceptable terms,if at all, or that it will be adequate to execute our business strategy. If funds are not available, we may be required to delay,reduce the scope of, or eliminate development of Ampion, or substantially curtail or close our operations altogether.Even if we obtain additional financing, it may be on terms not favorable to us, it may be costly and it may require us to agreeto covenants or other provisions that will favor new investors over existing shareholders or other restrictions that mayadversely affect our business. Additional funding, if obtained, may also result in significant dilution to our stockholders.Alternatively, we may have to obtain a collaborator for Ampion at an earlier stage of development than planned, which couldlower our economic value.Our business is highly dependent on the success of Ampion. If Ampion does not receive regulatory approval or is notsuccessfully commercialized, our business is likely to be harmed. A substantial portion of our business and future success depends on our ability to develop, obtain regulatory approval forand successfully commercialize Ampion. We currently have no products that are approved for commercial sale and maynever be able to develop marketable products. We are devoting all of our resources to the development of Ampion. Wecannot be certain that Ampion will be successful in ongoing or future clinical trials, receive regulatory approval or besuccessfully commercialized even if we receive regulatory approval. Ampion will be undergoing clinical trials that are time-consuming and expensive, the outcomes of which areunpredictable, and for which there is a high risk of failure. If clinical trials of Ampion fail to satisfactorily demonstratesafety and efficacy to the FDA and other regulators, the FDA may require additional clinical trials and we, or ourcollaborators, may incur additional costs or experience delays in completing, or ultimately be unable to complete, thedevelopment and commercialization of Ampion. Clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guaranteethat any clinical studies will be conducted as planned or completed on schedule, if at all. It may take several years tocomplete clinical development necessary to commercialize a biologic, and delays or failure can occur at any stage. Successin pre-clinical testing and the results of earlier clinical trials do not necessarily predict clinical success, and larger and later-stage clinical studies may not produce the same results as earlier-stage clinical studies. In addition, clinical studies ofpotential products often reveal that it is not possible or practical to continue development efforts for these productcandidates. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks inadvanced clinical trials even after promising results in earlier trials and we cannot be certain that we will not face similarsetbacks. The design of a clinical trial can determine whether its results will support approval of a product and flaws in thedesign of a clinical trial may not become apparent until the clinical trial is well advanced.We continue to work toward completion and analysis of clinical trials for Ampion. Any unfavorable outcomes of our trials forAmpion would be a major set-back for the development program and for us. Due to our limited financial resources, anunfavorable outcome in one or more of these trials may require us to delay, reduce the scope of, or eliminate the productdevelopment program, which could have a material adverse effect on our business and financial condition and on the valueof our common stock.In connection with clinical testing and trials, we face a number of risks, including:·Ampion is ineffective, inferior to existing approved medicines, unacceptably toxic, or has unacceptable sideeffects;·patients may die or suffer other adverse effects for reasons that may or may not be related to Ampion;·the results may not confirm the positive results of earlier testing or trials;·the results may not meet the level of statistical significance required by the FDA or other regulatory agencies toestablish the safety and efficacy of Ampion; and15 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·the FDA may require additional clinical testing and trials, which are costly and time consuming.If we do not successfully complete clinical development, we will be unable to market and sell products derived from Ampionand generate revenues. Even if we do successfully complete clinical trials, those results are not necessarily predictive ofresults of additional trials that may be needed before a BLA is submitted to the FDA. Although there are a large number ofbiologics in the development stage in the United States and other countries, only a small percentage result in the submissionof a BLA to the FDA, even fewer are approved for commercialization, and only a small number achieve widespread physicianand consumer acceptance following regulatory approval. If our clinical studies are substantially delayed or fail tosatisfactorily address the safety and effectiveness of Ampion in development, we may not receive regulatory approval ofAmpion and our business and financial condition will be materially harmed.Delays, suspensions and terminations in our clinical trials could result in increased costs to us and delay or prevent ourability to generate revenues.Human clinical trials are very expensive, time-consuming, and difficult to design, implement and complete. We currentlyexpect clinical trials of Ampion could take from 12 to 24 months to complete, however we cannot be certain we willsuccessfully complete current or future clinical trials within any specific time period, if at all. If we experience delay,suspensions or terminations in a clinical trial, the commercial prospects for Ampion will be harmed, our ability to generateproduct revenues will be delayed and our business may be jeopardized.The commencement and completion of clinical studies for Ampion may be delayed, suspended or terminated due to anumber of factors, including:·lack of effectiveness of Ampion during clinical studies;·adverse events, safety issues or side effects relating to Ampion or its formulation;·not demonstrating sufficient safety and efficacy to obtain regulatory approval;·inability to reach an agreement with the FDA on the design of a clinical trial;·inability to reach an agreement on acceptable terms with prospective contract research organizations andclinical trial sites;·inability to manufacture or obtain from third party materials sufficient for use in clinical studies;·not obtaining institutional review board approval to conduct a clinical trial at a prospective clinical trial site;·not determining dosing and making related adjustments;·delays in patient enrollment, variability in the number and types of patients available for clinical studies, andlower than anticipated retention rates for patients in clinical trials, which is a function of many factors,including the size of the patient population, the nature of the protocol, the proximity of patients to clinical trialsites, the availability of effective treatments for the relevant disease and the eligibility criteria for the clinicaltrial;·inability to raise additional capital in sufficient amounts to continue clinical trials or development programs,which are very expensive;·the need to sequence clinical studies as opposed to conducting them concomitantly in order to conserveresources;·our inability to enter into collaborations relating to the development and commercialization of Ampion;·failure by us or our collaborators to conduct clinical trials in accordance with regulatory requirements;16 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·governmental or regulatory delays and changes in regulatory requirements, interpretation, policy andguidelines, including mandated changes in the scope or design of clinical trials or requests for supplementalinformation with respect to clinical trial results;·difficulty in patient monitoring and data collection due to failure of patients to maintain contact after treatment;·a regional disturbance where we or our collaborative partners are enrolling patients in our clinical trials, such asa pandemic, terrorist activities or war, or a natural disaster; and·varying interpretations of data by the FDA and similar foreign regulatory agencies.Many of these factors may also ultimately lead to denial of regulatory approval of Ampion.Furthermore, if we fail to comply with applicable FDA and other regulatory requirements at any stage during this regulatoryprocess, we may encounter or be subject to:·delays in clinical trials or commercialization;·refusal by the FDA to review pending applications or supplements to approved applications;·product recalls or seizures;·suspension of manufacturing;·withdrawals of previously approved marketing applications; and·fines, civil penalties, and criminal prosecutions.If Ampion is not approved by the FDA, we will be unable to commercialize it in the United States.We rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costsand delays that prevent us from successfully commercializing Ampion. We rely, and will rely in the future, on medical institutions, clinical investigators, contract research organizations, contractlaboratories, and collaborators to perform data collection and analysis and other aspects of our clinical trials.Our clinical trials conducted by third parties may be delayed, suspended, or terminated if:·the third parties do not successfully carry out their contractual duties or fail to meet regulatory obligations orexpected deadlines;·we replace a third party; or·the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere toclinical protocols, regulatory requirements, or for other reasons.Third party performance failures may increase our development costs, delay our ability to obtain regulatory approval, anddelay or prevent the commercialization of Ampion. If we seek alternative sources to provide these services, we may not beable to enter into replacement arrangements without incurring delays or additional costs.If we do not receive marketing approval for Ampion, we may not realize the investment we have made in ourmanufacturing facility.In December 2013, we entered into a ten-year lease of a multi-purpose facility containing approximately 19,000 square feet.We have spent approximately $10.8 million dollars to build out this facility in anticipation of receiving approval of17 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour BLA and commencing commercialization of Ampion. If the FDA does not approve our BLA for Ampion, or does notapprove of our manufacturing operation, we will not be able to manufacture and commercialize Ampion in our facility andwe will remain obligated to make payments under our lease, which is set to expire in 2024. Any delay or failure to receiveBLA approval for Ampion could have a material adverse effect on the carrying value of the manufacturing facility as well ason our results of operations.Relying on third-party suppliers may result in delays in our clinical trials and product introduction.We currently obtain the Human Serum Albumin, or HSA, needed to produce Ampion for our clinical trials from one supplierin the United States. Our clinical trials and ultimately FDA approval may be delayed if we are unable to obtain a sufficientquantity of the HSA raw material needed to produce Ampion on a timely basis or if we need to establish an alternative sourceof supply for the raw material.Once regulatory approval is obtained, a marketed product and its suppliers are subject to continual review. The discovery ofpreviously unknown problems with a product or supplier may result in restrictions on the product, supplier or manufacturingfacility, including withdrawal of the product from the market. Our raw material supplier for HSA is required to operate inaccordance with FDA-mandated current good manufacturing practices, or cGMPs. A failure of any of our contract suppliers toestablish and follow cGMPs and to document their adherence to such practices may lead to significant delays in the launchof Ampion into the market. Failure by third-party suppliers to comply with applicable regulations could result in sanctionsbeing imposed on us, including fines, injunctions, civil penalties, revocation or suspension of marketing approval for ourproduct, seizures or recalls of our product, operating restrictions and criminal prosecutions.If we use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liablefor damages or fines.The research and development activities conducted at our facility involve the controlled use of potentially hazardoussubstances, including chemical, biological and radioactive materials and produce hazardous waste products. Ourmanufacturing facility involves the controlled use of potentially hazardous substances and produces hazardous wasteproducts. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal ofhazardous materials. If we experience a release of hazardous substances, it is possible that this release could cause personalinjury or death, and require decontamination of the facility. In the event of an accident while manufacturing Ampion, wecould be held liable for damages or face substantial penalties. We do not have any insurance for liabilities arising from theprocurement, handling, or discharge of hazardous materials. Compliance with applicable environmental laws and regulationsis expensive, and current or future environmental regulations may delay our research, development and production efforts,which could harm the financial condition of our business or impair our operations.Even if we obtain marketing approvals for Ampion, the terms of approvals and ongoing regulation of our product maylimit how we, or our collaborators, manufacture and market our product, which could materially impair our ability togenerate revenue.Even if we receive regulatory approval for Ampion, this approval may carry conditions that limit the market for the productor put the product at a competitive disadvantage relative to alternative therapies. For instance, a regulatory approval maylimit the indicated uses for which we can market a product or the patient population that may utilize the product, or mayrequire a warning in the labeling and on its packaging. Products with boxed warnings are subject to more restrictiveadvertising regulations than products without such warnings. These restrictions could make it more difficult to marketAmpion effectively.In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensiveFDA requirements, including ensuring that quality control and manufacturing procedures conform to cGMPs, which includerequirements relating to quality control and quality assurance as well as the corresponding maintenance of records andreporting requirements. We, our contract manufacturers, our collaborators and their contract manufacturers could be subjectto periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMPs.18 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAccordingly, assuming we, or our collaborators, receive marketing approval for Ampion, we, our collaborators and contractmanufacturers will continue to expend time, money and effort in all areas of regulatory compliance, includingmanufacturing, production, product surveillance and quality control.Ampion for which we obtain marketing approval in the future could be subject to post-marketing restrictions orwithdrawal from the market and we, and our collaborators, may be subject to substantial penalties if we, or they, fail tocomply with regulatory requirements or if we, or they, experience unanticipated problems with our product followingapproval.Ampion for which we, or our collaborators, obtain marketing approval in the future, as well as the manufacturing processes,post-approval studies and measures, labeling, advertising and promotional activities for such product, among other things,will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirementsinclude submissions of safety and other post-marketing information and reports, registration and listing requirements,requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records anddocuments, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approvalof Ampion is granted, the approval may be subject to limitations on the indicated uses for which the product may bemarketed or to the conditions of approval, including the FDA requirement to implement a Risk Evaluation and MitigationStrategy to ensure that the benefits of a biological product outweigh its risks.The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor thesafety or efficacy of a product. The FDA and other agencies, including the Department of Justice, closely regulate andmonitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed anddistributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDAimposes stringent restrictions on manufacturers’ communications regarding off-label use and if we, or our collaborators, donot market Ampion in accordance with the marketing approval received for the product’s approved indications, we, or they,may be subject to warnings or enforcement action for off-label marketing. Violation of the FDCA, the Public Health ServiceAct and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs maylead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumerprotection laws.If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect,the commercialization of Ampion may be delayed, our business will be harmed, and our stock price may decline.We sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory andother product development objectives. These milestones may include our expectations regarding the commencement orcompletion of scientific studies, clinical trials, the submission of regulatory filings, or commercialization objectives. Fromtime to time, we may publicly announce the expected timing of some of these milestones, such as the completion of anongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval, or a commercial launch of aproduct. The achievement of many of these milestones may be outside of our control. All of these milestones are based on avariety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates,including:·our available capital resources or capital constraints we experience;·the rate of progress, costs and results of our clinical trials and research and development activities, including theextent of scheduling conflicts with participating clinicians and collaborators, and our ability to identify andenroll patients who meet clinical trial eligibility criteria;·our receipt of approvals by the FDA and other regulatory agencies and the timing thereof;·other actions, decisions or rules issued by regulators;·our ability to access sufficient, reliable and affordable supplies of compounds used to manufacture Ampion;·the efforts of our collaborators with respect to the commercialization of our product; and19 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·costs related to, and timing issues associated with, product manufacturing as well as sales and marketingactivities.If we fail to achieve announced milestones in the timeframes we announce and expect, our business and results of operationsmay be harmed and the price of our stock may decline.Even if collaborators with which we contract in the future successfully complete clinical trials of Ampion, our product maynot be commercialized successfully for other reasons.Even if we contract with collaborators that successfully complete clinical trials for Ampion, our product may not becommercialized for other reasons, including:·failure to receive the regulatory clearances required to market Ampion;·being subject to proprietary rights held by others;·being difficult or expensive to manufacture on a commercial scale;·having adverse side effects that make Ampion’s use less desirable; or·failing to compete effectively with products or treatments commercialized by competitors.We might enter into agreements with collaborators to commercialize Ampion once we obtain regulatory approvals, whichmay affect the sales of our product and our ability to generate revenues.We are not currently established to handle sales, marketing and distribution of pharmaceutical products and may contractwith, or license, third parties to market Ampion if we receive regulatory approvals. Outsourcing sales and marketing in thismanner may subject us to a variety of risks, including:·our inability to exercise control over sales and marketing activities and personnel;·failure or inability of contracted sales personnel to obtain access to or persuade adequate numbers of physiciansto prescribe our product;·disputes with collaborators concerning sales and marketing expenses, calculation of royalties, and sales andmarketing strategies;·unforeseen costs and expenses associated with sales and marketing;·collaborators may not have sufficient resources or decide not to devote the necessary resources due to internalconstraints such as budget limitations, lack of human resources, or a change in strategic focus;·collaborators may believe our intellectual property or Ampion infringes on the intellectual property rights ofothers;·collaborators may dispute their responsibility to conduct commercialization activities pursuant to theapplicable collaboration, including the payment of related costs or the division of any revenues;·collaborators may decide to pursue a competitive product developed outside of the collaboration arrangement;·collaborators may delay the commercialization of Ampion in favor of commercializing another party’s productcandidate; or·collaborators may decide to terminate or not to renew the collaboration for these or other reasons.20 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf we are unable to partner with a third party that has adequate sales, marketing, and distribution capabilities, we may havedifficulty commercializing Ampion, which would adversely affect our business, financial condition, and ability to generateproduct revenues.We face substantial competition from companies with considerably more resources and experience than we have, whichmay result in others discovering, developing, receiving approval for, or commercializing products before or moresuccessfully than us.Our ability to succeed in the future depends on our ability to discover, develop and commercialize a pharmaceutical productthat offers superior efficacy, convenience, tolerability, and safety when compared to existing treatment methodologies. Weintend to do so by identifying a product candidate that is based on a modified active ingredient which previously receivedregulatory approval. Because our strategy is to develop a new product candidate primarily for the treatment of a disease thataffects a large patient population, our product is likely to compete with a number of existing medicines or treatments, and alarge number of product candidates that are being developed by others.Many of our potential competitors have substantially greater financial, technical, personnel and marketing resources than wedo. In addition, many of these competitors have significantly greater resources devoted to product development and pre-clinical research. Our ability to compete successfully will depend largely on our ability to:·develop Ampion to be superior to other products in the market;·attract and retain qualified personnel;·obtain patent and/or other proprietary protection for Ampion;·obtain required regulatory approvals; and·obtain collaboration arrangements to commercialize Ampion.Established pharmaceutical companies devote significant financial resources to discovering, developing or licensing novelcompounds that could make Ampion obsolete. Our competitors may obtain patent protection, receive FDA approval, andcommercialize medicines before us. Other companies are engaged in the discovery of compounds that may compete withAmpion.Any new product that competes with a currently-approved treatment or medicine must demonstrate compelling advantages inefficacy, convenience, tolerability and/or safety to address price competition and be commercially successful. If we are notable to compete effectively against our current and future competitors, our business will not grow and our financial conditionand operations will suffer.Product liability and other lawsuits could divert our resources, result in substantial liabilities and reduce the commercialpotential of Ampion.The risk that we may be sued on product liability claims is inherent in the development and commercialization ofpharmaceutical products. Side effects of, or manufacturing defects in, the product that we develop which is commercializedby any collaborators could result in the deterioration of a patient’s condition, injury or even death. Once a product isapproved for sale and commercialized, the likelihood of product liability lawsuits increases. Claims may be brought byindividuals seeking relief for themselves or by individuals or groups seeking to represent a class. These lawsuits may divertour management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any ofthese lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of Ampion.We may be subject to legal or administrative proceedings and litigation other than product liability lawsuits which may becostly to defend and could materially harm our business, financial conditions and operations.Although we maintain general liability and product liability insurance, this insurance may not fully cover potentialliabilities. In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to21 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsotherwise protect against potential product or other legal or administrative liability claims could prevent or inhibit thecommercial production and sale of Ampion that receives regulatory approval, which could adversely affect our business.Product liability claims could also harm our reputation, which may adversely affect our collaborators’ ability tocommercialize our product successfully.If Ampion is commercialized, this does not assure acceptance by physicians, patients, third-party payors, or the medicalcommunity in general.We cannot be sure that Ampion, if and when approved for marketing, will be accepted by physicians, patients, third-partypayors, or the medical community in general. Even if the medical community accepts a product as safe and efficacious for itsindicated use, physicians may choose to restrict the use of the product if we or any collaborator are unable to demonstratethat, based on experience, clinical data, side-effect profiles and other factors, our product is preferable to any existingmedicines or treatments. We cannot predict the degree of market acceptance of Ampion once we receive marketing approval,which will depend on a number of factors, including, but not limited to:·the clinical efficacy and safety of the product;·the approved labeling for the product and any required warnings;·the advantages and disadvantages of the product compared to alternative treatments;·our and any collaborator’s ability to educate the medical community about the safety and effectiveness of theproduct;·the reimbursement policies of government and third-party payors pertaining to our product; and·the market price of our product relative to competing treatments.Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, maynegatively impact our ability to generate revenues if we obtain regulatory approval to market our product.The commercial success of Ampion will depend on the reimbursement rates from health maintenance, managed care,pharmacy benefit, government health administration authorities, private health coverage insurers and other third-partypayors. If reimbursement is not available, or is available only to limited levels, we, or our collaborators, may not be able tosuccessfully commercialize Ampion. Even if coverage is provided, the approved reimbursement amount may not be highenough to allow us, or our collaborators, to establish or maintain pricing to realize a sufficient return on our or theirinvestments.The continuing efforts of the government, insurance companies, managed care organizations and other payors of health carecosts to contain or reduce costs of health care may adversely affect one or more of the following:·our or our collaborators’ ability to set a price we believe is fair for Ampion, if approved;·our ability to generate revenues and achieve profitability; and·the availability of capital.The 2010 enactments of the Patient Protection and Affordable Care Act and the Health Care and Education ReconciliationAct are expected to significantly impact the provision of, and payment for, health care in the United States. Variousprovisions of these laws are designed to expand Medicaid eligibility, subsidize insurance premiums, provide incentives forbusinesses to provide health care benefits, prohibit denials of coverage due to pre-existing conditions, establish healthinsurance exchanges, and provide additional support for medical research. Additional legislative proposals to reformhealthcare and government insurance programs, along with the trend toward managed healthcare in the United States, couldinfluence the purchase of medicines and reduce demand and prices for our products, if approved. This could harm our or ourcollaborators’ ability to market our product and generate revenues.22 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCost containment measures that health care payors and providers are instituting and the effect of further health care reformcould significantly reduce potential revenues from the sale of Ampion in the future, and could cause an increase in ourcompliance, manufacturing, or other operating expenses. In addition, in certain foreign markets, the pricing of prescriptiondrugs is subject to government control and reimbursement may in some cases be unavailable. We believe that pricingpressures at the federal and state level, as well as internationally, will continue and may increase, which may make it difficultfor us to sell our potential product that may be approved in the future at a price acceptable to us or any of our futurecollaborators.The approval process outside the United States varies among countries and may limit our ability to develop, manufactureand sell our product internationally. Failure to obtain marketing approval in international jurisdictions would preventAmpion from being marketed abroad.In order to market and sell our product in the EU and many other jurisdictions, we, and our collaborators, must obtainseparate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedures varyamong countries and can involve additional testing. We may conduct clinical trials for, and seek regulatory approval tomarket, Ampion in countries other than the United States. Depending on the results of clinical trials and the process forobtaining regulatory approvals in other countries, we may decide to first seek regulatory approvals of Ampion in countriesother than the United States, or we may simultaneously seek regulatory approvals in the United States and other countries. Ifwe or our collaborators seek marketing approvals for Ampion outside the United States, we will be subject to the regulatoryrequirements of health authorities in each country in which we seek approvals. With respect to marketing authorizations inEurope, we will be required to submit a European marketing authorization application, or MAA, to the European MedicinesAgency, or EMA, which conducts a validation and scientific approval process in evaluating a product for safety and efficacy.The approval procedure varies among regions and countries and can involve additional testing, and the time required toobtain approvals may differ from that required to obtain FDA approval. Obtaining regulatory approvals from healthauthorities in countries outside the United States is likely to subject us to all of the risks associated with obtaining FDAapproval described above. In addition, marketing approval by the FDA does not ensure approval by the health authorities ofany other country and approval by foreign health authorities does not ensure marketing approval by the FDA.Our drug development program to date has been dependent in large part upon the services of Dr. David Bar-Or, who retiredas Chief Scientific Officer in September 2018.Our drug development program to date has been dependent in large part upon the services of Dr. David Bar-Or, who retiredfrom his full-time role as Chief Scientific Officer effective September 30, 2018. Although Dr. Bar-Or has continued to serve asa member of our Board of Directors and our Scientific Advisory Board, the loss of his services as our full-time Chief ScientificOfficer could result in delays of other product development activities, and our ability to develop and commercialize newproduct candidates may be diminished. Business interruptions could limit our ability to operate our business.Our operations are vulnerable to damage or interruption from computer viruses, human error, natural disasters,telecommunications failures, intentional acts of misappropriation, and similar events. We have not established a formaldisaster recovery plan or back-up operations. Additionally, our business interruption insurance may not be adequate tocompensate us for losses that occur. A significant business interruption could result in losses or damages and require us tocurtail our operations.While we are not aware of any cybersecurity incidents, the cybersecurity landscape continues to evolve and we may find itnecessary to make further investments to protect our data and infrastructure.We continuously work to install new and upgrade existing information technology systems and provide employee awarenesstraining around phishing, malware and other cyber risks to ensure that we are protected, to the greatest extent possible,against cyber risks and security breaches. Any actual or suspected security breach or other compromise of our securitymeasures or those of our third-party vendors, whether as a result of hacking efforts, denial-of-service attacks, viruses,malicious software, break-ins, phishing attacks or otherwise, could harm our reputation and business, require us to expendsignificant capital and other resources to address the breach, and result in a violation of applicable laws, regulations or otherlegal obligations.23 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRisks Related to Our Intellectual PropertyOur ability to compete may decline if we do not adequately protect our proprietary rights.Our commercial success depends on obtaining and maintaining proprietary rights for Ampion including its compounds anduses. We must successfully defend these rights against third-party challenges. We will only be able to protect Ampion’sproprietary compounds, and its use from unauthorized use to the extent that valid and enforceable patents, or effectivelyprotected trade secrets, cover them.Our ability to obtain patent protection for Ampion and its compounds is uncertain due to a number of factors, including:·we may not be the first to make the inventions covered by pending patent applications or issued patents;·we may not be the first to file patent applications for Ampion or its compounds we developed or for its use;·others may independently develop identical, similar or alternative products or compounds;·our disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability;·any or all of our pending patent applications may not result in issued patents;·we may not seek or obtain patent protection in countries that may eventually provide us a significant businessopportunity;·any patents issued to us may not provide a basis for commercially viable products, may not provide anycompetitive advantages, or may be successfully challenged by third parties;·our proprietary compound may not be patentable;·others may design around our patent claims to produce competitive products which fall outside of the scope ofour patents; and·others may identify prior art which could invalidate our patents.Even if we have or obtain patents covering Ampion or its compounds, we may still be barred from making, using and sellingAmpion or technologies because of the patent rights of others. Others have or may have filed, and in the future may file,patent applications covering compounds or products that are similar or identical to ours. There are many issued U.S. andforeign patents relating to chemical compounds and therapeutic products, and some of these relate to compounds we intendto commercialize. Numerous U.S. and foreign issued patents and pending patent applications owned by others exist. Thesecould materially affect our ability to develop Ampion or sell our product if approved. Because patent applications can takemany years to issue, there may be currently pending applications unknown to us that may later result in issued patents thatAmpion or its compounds may infringe. These patent applications may have priority over patent applications filed by us.We periodically conduct searches to identify patents or patent applications that may prevent us from obtaining patentprotection for our compounds or that could limit the rights we have claimed in our patents and patent applications. Disputesmay arise regarding the source or ownership of our inventions. It is difficult to determine if and how such disputes would beresolved. Others may challenge the validity of our patents. If our patents are found to be invalid, we will lose the ability toexclude others from making, using or selling the compounds or products addressed in those patents. We generally do notcontrol the prosecution, maintenance or enforcement of patents covering licensed compounds or products.24 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsConfidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and otherproprietary information and may not adequately protect our intellectual property, which could limit our ability to compete.Because we operate in the highly technical field of drug discovery and development of therapies that can addressinflammation and other conditions, we rely in part on trade secret protection to protect our proprietary technology andprocesses. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignmentagreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors.These agreements generally require that the other party keep confidential, and not disclose to third parties, all confidentialinformation developed by the party or made known to the party by us during the party’s relationship with us. Theseagreements also generally provide that inventions conceived by the party while rendering services for us will be ourexclusive property.However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Enforcing aclaim that a party illegally obtained and is using our trade secrets is difficult, expensive and time consuming and theoutcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failureto obtain or maintain trade secret protection could adversely affect our competitive position.A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of otherscould be time consuming and costly, and an unfavorable outcome could harm our business.There is significant litigation in the pharmaceutical industry regarding patent and other intellectual property rights. Whilewe are not currently subject to any pending intellectual property litigation, and are not aware of any such threatenedlitigation, we may be exposed to future litigation by third parties based on claims that Ampion, technologies or activitiesinfringe the intellectual property rights of others. There may be many patents relating to repositioned biologics orcompounds used to treat inflammation. Some of these may encompass repositioned biologics or compounds that we utilizefor Ampion. If our development activities are found to infringe any such patents, we may have to pay significant damages orseek licenses to such patents. A patentee could prevent us from using the patented biologics or compounds. We may need toresort to litigation to enforce a patent issued to us, to protect our trade secrets, or to determine the scope and validity of third-party proprietary rights. From time to time, we may hire scientific personnel or consultants formerly employed by othercompanies involved in one or more areas similar to the activities conducted by us. Either we or these individuals may besubject to allegations of trade secret misappropriation or other similar claims as a result of prior affiliations. If we becomeinvolved in litigation, it could consume a substantial portion of our managerial and financial resources, regardless of whetherwe win or lose. We may not be able to afford the costs of litigation. Any legal action against us or our collaborators couldlead to:·payment of damages, potentially treble damages, if we are found to have willfully infringed a party’s patentrights;·injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, andsell Ampion; or·us or our collaborators having to enter into license arrangements that may not be available on commerciallyacceptable terms, if at all.As a result, we could be prevented from commercializing Ampion.Pharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determinedadversely to us, could negatively impact our patent position.The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal and factual questions.For example, some of our patents and patent applications cover methods of use of repositioned drugs, while other patents andpatent applications cover composition of a particular compound. The interpretation and breadth of claims allowed in somepatents covering pharmaceutical compounds may be uncertain and difficult to determine, and are often affected materially bythe facts and circumstances that pertain to the patented compound and the related patent claims. The standards of the UnitedStates Patent and Trademark Office, or USPTO, are sometimes uncertain and could change in the future. Consequently, theissuance and scope of patents cannot be predicted with certainty. Patents, if25 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsissued, may be challenged, invalidated or circumvented. U.S. patents and patent applications may also be subject tointerference proceedings, and U.S. patents may be subject to reexamination proceedings by the USPTO. Foreign patents maybe subject to opposition or comparable proceedings in the corresponding foreign patent offices, which could result in eitherloss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of thepatent or patent application. In addition, such interference, reexamination and opposition proceedings may be costly.Accordingly, rights under any issued patents may not provide us with sufficient protection against competitive products orprocesses.In addition, changes in or different interpretations of patent laws in the United States and foreign countries may permit othersto use our discoveries or to develop and commercialize our technology and product without providing any compensation tous, or may limit the number of patents or claims we can obtain. The laws of some countries do not protect intellectualproperty rights to the same extent as U.S. laws and those countries may lack adequate rules and procedures for defending ourintellectual property rights. For example, some countries do not grant patent claims directed to methods of treating humansand, in these countries, patent protection may not be available at all to protect Ampion. In addition, U.S. patent laws maychange, which could prevent or limit us from filing patent applications or patent claims to protect our products and/orcompounds.If we fail to obtain and maintain patent protection and trade secret protection for Ampion and its’ proprietary compounds andtheir uses, we could lose our competitive advantage and the competition we face could increase, reducing any potentialrevenues and adversely affecting our ability to attain or maintain profitability.Risks Related to Our Common StockThe price of our stock has been extremely volatile and may continue to be volatile and fluctuate substantially, which couldresult in substantial losses for purchasers of our common stock.The price of our common stock has been extremely volatile and may continue to be so. The stock market in general and themarket for pharmaceutical companies have experienced extreme volatility that has often been unrelated to the operatingperformance of a particular company. The following factors, in addition to the other risk factors described in this section, mayalso have a significant impact on the market price of our common stock:·any actual or perceived adverse developments in clinical trials for Ampion, such as the FDA not considering theAP-003-C trial to be an adequate and well-controlled pivotal clinical trial that can support a BLA filing;·any actual or perceived difficulties or delays in obtaining regulatory approval of Ampion in the United States orother countries once clinical trials are completed;·any finding that Ampion is not safe or effective, or any inability to demonstrate the clinical effectiveness ofAmpion when compared to existing treatments;·any actual or perceived adverse developments in repurposed drug technologies, including any change in FDApolicy or guidance on approval of repurposed drug technologies for new indications;·any announcements of developments with, or comments by, the FDA, the EMA, or other regulatory authoritieswith respect to our development of Ampion;·any announcements concerning our retention or loss of key employees, such as Dr. Bar-Or’s decision to retire asour Chief Scientific Officer;·our success or inability to obtain collaborators to conduct clinical trials, commercialize Ampion onceregulatory approval is obtained, or market and sell Ampion;·announcements of patent issuances or denials, product innovations, or introduction of new commercial productsby our competitors that will compete with Ampion;26 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·publicity regarding actual or potential study results or the outcome of regulatory reviews relating to thedevelopment of Ampion or our competitors;·economic and other external factors beyond our control; and·sales of stock by us or by our shareholders.In addition, we believe there has been and may continue to be substantial off-market transactions in derivatives of our stock,including short selling activity or related similar activities, which are beyond our control and which may be beyond the fullcontrol of the SEC and Financial Institutions Regulatory Authority, or FINRA. While SEC and FINRA rules prohibit someforms of short selling and other activities that may result in stock price manipulation, such activity may nonetheless occurwithout detection or enforcement. We have held conversations with regulators concerning trading activity in our stock;however, there can be no assurance that should there be any illegal manipulation in the trading of our stock it will bedetected, prosecuted or successfully eradicated. Significant short selling or other types of market manipulation could causeour stock trading price to decline, to become more volatile, or both.The price of our stock may be vulnerable to manipulation.Our common stock has been the subject of significant short selling by certain market participants. Short sales are transactionsin which a market participant sells a security that it does not own. To complete the transaction, the market participant mustborrow the security to make delivery to the buyer. The market participant is then obligated to replace the security borrowedby purchasing the security at the market price at the time of required replacement. If the price at the time of replacement islower than the price at which the security was originally sold by the market participant, then the market participant willrealize a gain on the transaction. Thus, it is in the market participant’s interest for the market price of the underlying securityto decline as much as possible during the period prior to the time of replacement.Because our unrestricted public float has been small relative to other issuers, previous short selling efforts have impacted,and may in the future continue to impact, the value of our stock in an extreme and volatile manner to our detriment and thedetriment of our shareholders. In addition, market participants with admitted short positions in our stock have published, andmay in the future continue to publish, negative information regarding us and our management team on internet sites or blogsthat we believe is inaccurate and misleading. We believe that the publication of this negative information has led, and mayin the future continue to lead, to significant downward pressure on the price of our stock to our detriment and the furtherdetriment of our shareholders. These and other efforts by certain market participants to manipulate the price of our commonstock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it moredifficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reducedemand from new investors to purchase shares of our stock.If we cannot continue to satisfy the NYSE American listing maintenance requirements and other rules, including thedirector independence requirements, our securities may be delisted, which could negatively impact the price of oursecurities.Although our common stock is listed on the NYSE American, we may be unable to continue to satisfy the listingmaintenance requirements and rules. If we are unable to satisfy the NYSE American criteria for maintaining our listing, oursecurities could be subject to delisting. To qualify for continued listing on the NYSE American, we must remain incompliance. There can be no assurances that we will be able to continue to comply with the NYSE American listingrequirements.If the NYSE American delists our securities, we could face significant consequences, including:·a limited availability for market quotations for our securities;·reduced liquidity with respect to our securities;·a determination that our common stock is a “penny stock,” which will require brokers trading in our commonstock to adhere to more stringent rules and possibly result in reduced trading;27 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·activity in the secondary trading market for our common stock;·limited amount of news and analyst coverage; and·a decreased ability to issue additional securities or obtain additional financing in the future.In addition, we would no longer be subject to the NYSE American rules, including rules requiring us to have a certainnumber of independent directors and to meet other corporate governance standards.Concentration of our ownership limits the ability of our shareholders to influence corporate matters.As of March 1, 2019, holders of more than 5% of our common stock and our directors, executive officers and their affiliatesbeneficially owned 24.5% of our outstanding common stock. These shareholders may have significant effect on the outcomeof actions taken by us that require shareholder approval.Anti-takeover provisions in our charter and bylaws and in Delaware law could prevent or delay a change in control ofAmpio.Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition thatshareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium fortheir shares. These provisions include:·requiring supermajority shareholder voting to effect certain amendments to our certificate of incorporation andbylaws;·restricting the ability of shareholders to call special meetings of shareholders;·establishing advance notice requirements for nominations for election to the board of directors or for proposingmatters that can be acted on by shareholders at shareholder meetings.Increased costs associated with corporate governance compliance may significantly impact our results of operations.As a public company, we incur significant legal, accounting, and other expenses due to our compliance with regulations anddisclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act of 2002, or the Sarbanes-OxleyAct, as well as rules implemented by the SEC, and the NYSE American. The SEC and other regulators have continued toadopt new rules and regulations and make additional changes to existing regulations that require our compliance. InJuly 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There aresignificant corporate governance and executive compensation related provisions in the Dodd-Frank Act that have requiredthe SEC to adopt additional rules and regulations in these areas. Stockholder activism, the current political environment, andthe current high level of government intervention and regulatory reform may lead to substantial new regulations anddisclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate,the manner in which we operate our business. Our management and other personnel devote a substantial amount of time tothese compliance programs and monitoring of public company reporting obligations, and as a result of the new corporategovernance and executive compensation related rules, regulations, and guidelines prompted by the Dodd-Frank Act, andfurther regulations and disclosure obligations expected in the future, we will likely need to devote additional time and coststo comply with such compliance programs and rules. These rules and regulations will cause us to incur significant legal andfinancial compliance costs and will make some activities more time-consuming and costly.The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls overfinancial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed toensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed,summarized, and reported within the time periods specified in SEC rules and forms, and that information required to bedisclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financialofficers. Our current controls and any new controls that we develop may become inadequate, and weaknesses in our internalcontrol over financial reporting may be discovered in the future. Any failure to develop or28 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsmaintain effective controls could adversely affect the results of periodic management evaluations and annual independentregistered public accounting firm attestation reports regarding the effectiveness of our internal control over financialreporting, which we may be required to include in our periodic reports that we file with the SEC under Section 404 of theSarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in arestatement of our prior period financial statements. If we are not able to demonstrate compliance with the Sarbanes-OxleyAct, that our internal controls over financial reporting are perceived as adequate, or that we are unable to produce timely oraccurate financial statements, investors may lose confidence in our operating results, and the price of our common stockcould decline.We are required to comply with certain of the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, whichrequires management to certify financial and other information in our quarterly and annual reports and provide an annualmanagement report on the effectiveness of our internal control over financial reporting. This assessment needs to include thedisclosure of any material weaknesses in our internal control over financial reporting identified by our management or ourindependent registered public accounting firm. During the evaluation and testing process, if we identify one or more materialweaknesses in our internal control over financial reporting or if we are unable to complete our evaluation, testing, and anyrequired remediation in a timely fashion, we will be unable to assert that our internal controls over financial reporting areeffective.These developments could make it more difficult for us to retain qualified members of our Board of Directors, or qualifiedexecutive officers. We are presently evaluating and monitoring regulatory developments and cannot estimate the timing ormagnitude of additional costs we may incur as a result. To the extent these costs are significant, our general andadministrative expenses are likely to increase.We have no plans to pay cash dividends on our common stock.We have no plans to pay cash dividends on our common stock. We intend to invest future earnings, if any, to fund ourgrowth. Any payment of future dividends will be at the discretion of our Board of Directors and will depend on, among otherthings, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictionsapplying to the payment of dividends and other considerations our Board of Directors deem relevant. Any future creditfacilities or preferred stock financing we obtain may further limit our ability to pay cash dividends on our common stock. Item 1B.Unresolved Staff CommentsNone. Item 2.PropertiesWe maintain our headquarters in leased space in Englewood, Colorado, for monthly rental payments of approximately$27,000. The lease expires in September 2024. We anticipate that the lease can be renewed on terms similar to those now ineffect. Item 3.Legal ProceedingsOn August 25, 2018 and August 31, 2018, two purported stockholders of the Company brought putative class action lawsuitsin the United States District Court for the Central District of California, Shi v. Ampio Pharmaceuticals, Inc., et al., Case No.2:18-cv-07476-SJO-RAO, and in the United States District Court for the District of Colorado, Shaffer v. AmpioPharmaceuticals, Inc., et al., Case No. 1:18-cv-02252-KLM, together, the “Securities Class Actions”. Plaintiffs in theSecurities Class Actions allege that the Company and certain of its current officers violated federal securities laws bymisrepresenting and/or omitting information regarding the AP-003 Phase III clinical trials of Ampion. Plaintiffs assert claimsunder Sections 10(b) and 20(a) and Rule 10b-5 under the Securities Exchange Act of 1934, on behalf of a putative class ofpurchasers of the Company’s common stock from December 14, 2017 through August 7, 2018. The Securities Class Actionsseek unspecified damages, interest, and attorneys’ fees and costs. On October 24, 2018, certain purported stockholders filedmotions to be appointed as lead plaintiff in the Shi case. On November 6, 2018, the Shaffer case was voluntarily dismissed. 29 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOn September 10, 2018, a purported stockholder of the Company brought a derivative action in the United States DistrictCourt for the Central District of California, Cetrone v. Macaluso, et al., Case No. 2:18-cv-05970-SJO-RAO, alleging primarilythat the directors and officers of Ampio breached their fiduciary duties because of their alleged misstatements and/oromissions regarding the AP-003 Phase III clinical trial of Ampion. On November 16, 2018, the case was stayed pendingproceedings in the Shi case. On October 5, 2018, a purported stockholder of the Company brought a derivative action in the United States District Courtfor the District of Colorado, Theise v. Macaluso, et al., Case No. 1:18-cv-02558-RBJ, which closely parallels the allegationsin the Cetrone case. On November 14, 2018, a purported stockholder of the Company brought a second derivative action inthe United States District Court for the District of Colorado, Lewis v. Macaluso, et al., Case No. 1:18-cv-02932-SKC, whichalso closely parallels the allegations in the Cetrone case. On December 19, 2018, the court consolidated the Theise and Lewisderivative actions, and the consolidated action is captioned In re Ampio Pharmaceuticals, Inc. Stockholder DerivativeLitigation, Case No. 1:18-cv-02558-RBJ. On January 3, 2019, this consolidated derivative action was stayed pendingproceedings in the Shi case. The Company believes these claims are without merit and intends to defend these lawsuits vigorously. The Companycurrently believes the likelihood of a loss contingency related to these matters is remote and, therefore, no provision for aloss contingency is required. Item 4.Mine Safety Disclosures.Not applicable. PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecuritiesMarket DataOn June 17, 2013, our common stock began trading on the NYSE American under the ticker symbol “AMPE”. It waspreviously quoted on the NASDAQ Capital Market under the same ticker symbol “AMPE”.Holders of Common StockAs of March 1, 2019, there were approximately 11,000 holders of record of our common stock.Dividend PolicyWe have never paid cash dividends and have no plans to pay cash dividends in the near future. We intend to utilize allavailable resources to develop Ampion. If we issue any preferred stock or obtain financing from a bank in the future, theterms of those financings may contain restrictions on our ability to pay dividends as long as the preferred stock or bankfinancing is outstanding.Unregistered Sales of Equity Securities and Use of ProceedsInformation regarding unregistered sales of equity securities and use of proceeds is incorporated by reference to Item 15 ofPart IV, Notes to Financial Statements – Note 7 – Common Stock of this annual report on Form 10-K. Equity Compensation Plan InformationInformation regarding our Equity Compensation Plan information is contained in Note 8 to the Financial Statements. 30 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Item 6.Selected Financial DataWe are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and arenot required to provide the information required under this item. Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis of our financial condition and results of operations together withour financial statements and the related notes appearing elsewhere in this report. Some of the information contained in thisdiscussion and analysis, including information with respect to our plans and strategy for our business and relatedfinancings, includes forward-looking statements that involve risks and uncertainties. You should read the “Risk Factors”section of this Form 10‑K for a discussion of important factors that could cause actual results to differ materially from theresults described in or implied by the forward-looking statements contained in the following discussion and analysis.EXECUTIVE SUMMARYWe are a development stage biopharmaceutical company focused on the development of Ampion, our product candidate, totreat prevalent inflammatory conditions for which there are limited treatment options.The pharmaceutical market is a competitive industry with strict regulations that are time intensive and costly. However, weare committed to offer a compelling therapeutic option for the patients most in need of new treatment options, and we operateevery day to advance Ampion.Since we are in the research and development phase, we have not generated revenue to date. Our operations are fundedthrough equity raises, which occur from time to time. To proceed with our operations, we will need to raise additional fundsto support the advancement of Ampion.Moving forward, we plan to maintain a lean and efficient operating model by streamlining our operations and continuing toallocate all our resources towards commercializing Ampion.Discussion regarding our business is contained in Part I, Item 1. Business. Recent Financing ActivitiesInformation regarding our Recent Financing Activities is contained in Note 7 to the Financial Statements.Known Trends or Future Events; OutlookWe are a clinical stage company that has not generated revenues and have therefore incurred significant net losses totaling$171.0 million since our inception in December 2008. We expect to generate operating losses for the foreseeable future as wecontinue the development of, and seek regulatory approval for Ampion. However, we intend to try to limit the extent of theselosses by entering into co-development or collaboration agreements with one or more strategic partners. As of December 31,2018, we had $7.6 million of cash which we expect can fund our operation into the second quarter of 2019. To operate asplanned in fiscal 2019 and into 2020 we will need to raise at least $16.0 million through equity offerings, debt or otherfinancing tools.On September 1, 2017, we received a letter from the NYSE American stating that they had determined that we were not incompliance with Sections 1003(a)(ii) and (iii) of the NYSE American Company Guide, or the Guide, since we reportedstockholders’ equity of $3,734,756 as of June 30, 2017 and net losses in our five most recent fiscal years ended December 31,2016. Prior to this, we were exempt from Section 1003(a) of the Guide since our market capitalization was above $50 million.We submitted a plan on October 2, 2017 advising the NYSE American of the actions that would be taken to regaincompliance with the continued listing standards by March 19, 2019. On November 9, 2017, we received a letter from theNYSE American stating that the NYSE American had accepted our plan to regain compliance with the continued listingstandards. On April 12, 2018, we received a letter from the NYSE American stating that we31 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsare again in compliance with all the NYSE American continued listing standards set forth in Part 10 of the Guide, specificallySections 1003(a)(ii) and (iii). Going forward, we will be subject to continued listing monitoring. Although we have raised net proceeds of over $139 million in the past ten years through the sale of common stock andwarrants, we cannot be assured that we will be able to secure additional financing, if needed, or that it will be adequate toexecute our business strategy. Even if we obtain additional financing, it may be costly and may require us to agree tocovenants or other provisions that will favor new investors over existing shareholders.Our primary focus for fiscal 2019 is raising additional capital and advancing the clinical development and BLA preparationof Ampion.Significant Accounting Policies and EstimatesInformation regarding our Significant Accounting Policies and Estimates is contained in Note 2 to the Financial Statements.Recent Accounting PronouncementsInformation regarding recently issued accounting standards (adopted and not adopted as of December 31, 2018) is containedin Note 2 to the Financial Statements.Stockholders’ Equity – Year Ended December 31, 2018 and 2017For the year ended December 31, 2018, we had stockholders’ equity of $5.2 million. Our total net income for the year was$34.0 million. The net income is primarily attributable to the non-cash derivative gain of $45.3 million that was recognized,which is offset by the operating expenses of $11.2 million during the year ended December 31, 2018. The decrease in ourstock price from $4.07 as of December 31, 2017 to $0.39 as of December 31, 2018 significantly decreased the value of ouroutstanding warrants, causing a derivative gain to be recognized.For the year ended December 31, 2017, we had a deficit in stockholders’ equity of $34.2 million. Our total net loss for theyear was $51.9 million. The net loss was primarily attributable to the non-cash derivative loss of $36.2 million, along with$15.7 million in operating losses during the year ended December 31, 2017. The increase in our stock price from $0.90 as ofDecember 31, 2016 to $4.07 as of December 31, 2017 significantly increased the value of our outstanding warrants, causing aderivative loss to be recognized.Results of Operations—Year Ended December 31, 2018 and 2017We recognized net income for the year ended December 31, 2018 of $34.0 million compared to a net loss of $51.9 million forthe same period in 2017. As noted above, the net income during the 2018 period is attributable to the non-cash derivativegain of $45.3 million that was recognized, which was offset by the operating expenses of $11.2 million. The net loss duringthe 2017 period was attributable to the non-cash derivative loss of $36.2 million that was recognized, in addition to theoperating expenses of $15.7 million. The investor warrant exercises and decrease in our stock price from $4.07 as ofDecember 31, 2017 to $0.39 as of December 31, 2018 caused the valuation of the warrant liability to decrease resulting in aderivative gain during the 2018 period. The increase in our stock price from $0.90 as of December 31, 2016 to $4.07 as ofDecember 31, 2017 caused the valuation of the warrant liability to increase resulting in a derivative loss during the 2017period. The operating expenses decreased $4.5 million from the 2017 period to the 2018 period primarily due to a $3.6million decrease in research and development costs and a $900,000 decrease in general and administrative costs, which isfurther explained below. 32 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsResearch and DevelopmentResearch and development costs consist of clinical trials and sponsored research, labor, stock-based compensation,consultants and sponsored research – related party. These costs relate solely to research and development without anallocation of general and administrative expenses and are summarized as follows: Years Ended December 31, 2018 2017Clinical trials and sponsored research $2,699,000 $5,529,000Consultants and other 2,114,000 1,950,000Labor 1,825,000 2,320,000Stock-based compensation 191,000 298,000Sponsored research - related party — 324,000 $6,829,000 $10,421,000 Comparison of Years Ended December 31, 2018 and 2017Research and development costs decreased $3.6 million, or 34.5%, for the year ended December 31, 2018 compared to thesame period in 2017. The decrease is primarily attributable to lower costs related to clinical trials and sponsored researchexpense, labor costs and stock-based compensation, as well as the sponsored research-related party. Our clinical trial costsdecreased from the 2017 period to the 2018 period. During the 2017 period, we incurred initial costs and clinical trialdevelopment expenses related to the AP-003-C study. During the 2018 period, we only incurred clinical trial developmentexpenses related to the OLE study, which was considered an extension of the AP-003-C study. Due to the OLE study beingan extension study, we did not incur initial costs during the 2018 period. In addition, the number of patients enrolled in theOLE study was less than the AP-003-C study, causing the expenses for the OLE study to be lower. The OLE study wasterminated during August 2018, with close-out costs being incurred through the beginning of fiscal 2019. Labor costs for the2018 period decreased from the 2017 period primarily due to the elimination of the bonus accrual because of a one-timeoption repricing, which is further discussed in Notes 2 and 8 of our financial statements. The elimination of the PTOcarryover also decreased the 2018 period labor costs. In addition, Dr. Bar-Or retired from his full-time role as our ChiefScientific Officer, effective September 30, 2018. Therefore, we only incurred nine months of his salary during the 2018period compared to twelve months during the 2017 period. The decrease in stock-based compensation is a result of feweroptions being granted at lower stock prices and previously awarded high priced options becoming fully vested during 2018.With high priced options becoming fully vested during 2018, we did not recognize a full year of stock-based compensationexpense for those options during the 2018 period, whereas we did recognize a full year of stock-based compensation expensefor those options during the 2017 period. In addition, the sponsored research – related party expense also contributed to thedecrease in the research and development costs due to the termination of the Trauma Research Agreement during the 2017period with no costs incurred during the 2018 period. Consultants and other costs increased as we incurred costs related todiscussions with the FDA surrounding our clinical trials.General and AdministrativeGeneral and administrative expenses consist of labor, director fees, stock-based compensation, patents and intellectualproperty, professional fees which include legal, auditing and accounting, occupancy, travel and other which includes rent,insurance, investor/public relations and professional subscriptions. These costs are summarized as follows: Years Ended December 31, 2018 2017Occupancy, travel and other $1,828,000 $2,167,000Professional fees 928,000 763,000Labor 534,000 956,000Patent costs 523,000 568,000Stock-based compensation 313,000 507,000Directors fees 229,000 294,000 $4,355,000 $5,255,000 33 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsComparison of Years Ended December 31, 2018 and 2017General and administrative costs decreased $900,000, or 17.1%, for the year ended December 31, 2018 compared to the sameperiod in 2017. The decrease is primarily attributable to lower occupancy, travel and other expenses, labor and stock-basedcompensation. Occupancy, travel and other expense decreased due to the termination of a contractual agreement that wasintended to assist us with potential partnerships, as well as a decrease in insurance premiums from the 2018 period comparedto the 2017 period. Occupancy, travel and other expense also decreased as we did not incur costs related to media outreachduring the 2018 period compared to the 2017 period. In addition, we incurred less travel costs during the 2018 periodcompared to the 2017 period. As noted in the Research and Development section above, labor costs decreased for the 2018period compared to the 2017 period primarily due to the elimination of the bonus accrual related to the option repricing,further discussed in Notes 2 and 8 of our financial statements. The elimination of the PTO carryover also decreased the 2018period labor costs. The decrease in stock-based compensation is a result of fewer options being granted at lower stock pricesand previously awarded high priced options becoming fully vested during 2018. With high priced options becoming fullyvested during 2018, we did not recognized a full year of stock-based compensation expense for those options during the2018 period, whereas we did recognize a full year of stock-based compensation expense for those options during the 2017period. Director fees also decreased as there were fewer board meetings during the 2018 period. There was an increase inprofessional fees due to an increase in legal fees related to litigation and an increase in accounting fees, as well as theamortization of a retainer related to a debt financing deal that did not occur.Net Cash Used in Operating ActivitiesDuring 2018, our operating activities from continuing operations used $12.1 million in cash, which was less than the netincome of $34.0 million primarily due to the $45.3 million non-cash gain from the warrant derivative, a decrease of $2.5million in accounts payable and accrued compensation and $180,000 increase in prepaid expenses. These amounts wereoffset by stock-based compensation, depreciation and amortization, loss from disposal of fixed assets and common stockissued for services.During 2017, our operating activities from continuing operations used $11.4 million in cash, which was less than the net lossof $51.9 million primarily due to the $36.2 million non-cash loss from the warrant derivative, as well as the stock-basedcompensation, depreciation and amortization and amortization of the prepaid research and development. Cash used inoperating activities also included a $332,000 decrease in accrued compensation, which was offset by a $2.1 million increasein accounts payable and accrued expenses and a decrease in prepaid expenses.Net Cash Used in Investing ActivitiesDuring 2018, cash was used to purchase $564,000 of equipment.During 2017, cash was used to purchase $72,000 of equipment.Net Cash from Financing ActivitiesDuring 2018, we received $4.9 million from option and warrant exercises. We also received gross proceeds from the sale ofcommon stock in a confidentially marketed public offering of $8.0 million, which was offset by offering costs of $844,000.During 2017, we received gross proceeds from the sale of common stock in registered direct offerings of $13.3 million, whichwas offset by offering costs of $1.3 million. We also received $2.8 million from option and warrant exercises.Contractual Obligations and CommitmentsInformation regarding Contractual Obligations and Commitments is contained in Note 6 to the Financial Statements.Liquidity and Capital ResourcesWe have not generated revenue or profits. Our primary activities are focused on research and development, advancingAmpion and raising capital. As of December 31, 2018, we had $7.6 million of cash which we expect will fund our34 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsoperation into the second quarter of 2019. To operate as planned in fiscal 2019 and into 2020 we will need to raise at least$16.0 million through equity offerings, debt or other financing tools. This projection is based on many assumptions that mayprove to be wrong, and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We willbe required to seek additional capital to expand our clinical and commercial development activities for Ampion. We intendto evaluate the capital markets from time to time to determine whether to raise additional capital in the form of equity,convertible debt or otherwise, depending on market conditions relative to our need for funds at such time. We have prepared a budget for 2019 which reflects cash requirements for fixed, on-going expenses such as payroll, legal andaccounting, patents and overhead at an average cash burn rate of approximately $700,000 per month. Additional funds areplanned for regulatory approvals, clinical trials, outsourced research and development and commercialization consulting.Accordingly, it will be necessary to raise additional capital and/or enter into licensing or collaboration agreements. At thistime, we expect to satisfy our future cash needs through private or public sales of our securities, debt financings or ourControlled Equity Offering Sales Agreement that we agreed to in February 2016 with respect to our ATM. We cannot becertain that financing will be available to us on acceptable terms, or at all. Volatility in the financial markets has adverselyaffected the market capitalizations of many pharmaceutical companies, particularly small capitalization companies, andgenerally made equity and debt financing more difficult to obtain. This volatility, coupled with other factors, may limit ouraccess to additional financing.If we cannot raise adequate additional capital in the future when we require it, we will be required to delay, reduce the scopeof, or eliminate the development program for Ampion or our future commercialization efforts or suspend operations for aperiod until we are able to raise additional capital. We also may be required to relinquish greater or all rights to Ampion, atan earlier stage of development or on less favorable terms than we would otherwise choose. This may lead to impairment orother charges, which could materially affect our balance sheet and operating results.Off Balance Sheet ArrangementsWe do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or otherpersons, also known as “variable interest entities.”Impact of InflationIn general, we believe that our operating expenses can be negatively impacted by increases in the cost of clinical trials due toinflation and rising health care costs. Item 7A. Quantitative and Qualitative Disclosures about Market RisksWe are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and arenot required to provide the information required under this item. Item 8. Financial Statements and Supplementary DataThe Financial Statements and Supplementary Data required by this item are in Item 15 of Part IV, “Index to FinancialStatements” at page F‑1 of this annual report on Form 10‑K and are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureEffective October 1, 2018, EKS&H LLLP (“EKS&H”), the independent registered public accounting firm for AmpioPharmaceuticals, Inc. (the “Company”), combined with Plante & Moran PLLC (“Plante Moran”). As a result of thistransaction, on October 1, 2018, EKS&H resigned as the independent registered public accounting firm for the Company.Concurrent with such resignation, the Company’s Audit Committee approved the engagement of Plante Moran as the newindependent registered public accounting firm for the Company. The audit reports of EKS&H on the Company’s financial statements for the years ended December 31, 2017 and 2016 did notcontain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope oraccounting principles except, the audit report of EKS&H on the Company’s financial statements for the years ended35 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDecember 31, 2017 and 2016 contained an explanatory paragraph indicating that there was substantial doubt about theability of the Company to continue as a going concern. During the two most recent fiscal years ended December 31, 2017 and 2016 and through the subsequent interim periodpreceding EKS&H’s resignation, there were no disagreements between the Company and EKS&H on any matter ofaccounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, ifnot resolved to the satisfaction of EKS&H would have caused them to make reference thereto in their reports on theCompany’s financial statements for such years. During the two most recent fiscal years ended December 31, 2017 and 2016 and through the subsequent interim periodpreceding EKS&H’s resignation, there were no reportable events within the meaning set forth in Item 304(a)(1)(v) ofRegulation S-K. During the two most recent fiscal years ended December 31, 2017 and 2016 and through the subsequent interim periodpreceding Plante Moran’s engagement, the Company did not consult with Plante Moran on either (1) the application ofaccounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that may berendered on the Company’s financial statements, and Plante Moran did not provide either a written report or oral advise tothe Company that Plante Moran concluded was an important factor considered by the Company in reaching a decision as tothe accounting, auditing or financial reporting issue; or (2) any matter that was either the subject of a disagreement, asdefined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as defined in Item 304(a)(1)(v) of Regulation S-K. Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe maintain “disclosure controls and procedures,” as such terms are defined in Rules 13a‑15(e) and 15d‑15(e) of theSecurities Exchange Act of 1934, or the Exchange Act, that are designed to ensure that information required to be disclosedby us in reports that we file or submit under the Exchange Act are recorded, processed, summarized, and reported within thetime periods specified in SEC rules and forms, and that such information is accumulated and communicated to ourmanagement, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisionsregarding required disclosure.As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with theparticipation of senior management, including the chief executive officer and the chief financial officer, of the effectivenessof the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a‑15(b) and15d‑15(b). Based upon this evaluation, the chief executive officer and the chief financial officer concluded that ourdisclosure controls and procedures as of the end of the period covered by this report were effective.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal controls over financial reporting (as suchterm is defined in Rules 13a‑15(f) under the Exchange Act). Our management assessed the effectiveness of our internalcontrols over financial reporting as of December 31, 2018. In making this assessment, our management used the criteria setforth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-IntegratedFramework (2013). Our management has concluded that, as of December 31, 2018, our internal controls over financialreporting are effective based on these criteria.Plante Moran PLLC, the independent registered public accounting firm that audited our financial statements included in thisAnnual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting, which isincluded herein at F-2. 36 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsChanges in Internal Control over Financial ReportingThere were no changes in our internal controls over financial reporting, known to the chief executive officer or the chieffinancial officer that occurred during the period covered by this report that have materially affected, or are reasonably likelyto materially affect, our internal controls over financial reporting. Item 9B. Other InformationNone.37 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents PART III Item 10. Directors and Executive Officers, and Corporate GovernanceThe following table sets forth the names, ages and positions of our directors and executive officers as of March 10, 2019.Name Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SinceMichaelMacaluso 67 Chief Executive Officerand Chairman of the Board Mr. Macaluso founded Life Sciences and has been amember of the Board of Directors of Life Sciences,our predecessor, since its inception. Mr. Macalusohas also been a member of our Board of Directorssince the merger with Chay Enterprises inMarch 2010 and our Chief Executive Officer, orCEO, since January 2012. Mr. Macaluso wasappointed president of Isolagen, Inc. (AMEX: ILE)and served in that position from June 2001 toAugust 2001, when he was appointed ChiefExecutive Officer. In June 2003, Mr. Macaluso wasre-appointed as President of Isolagen and served asboth Chief Executive Officer and President untilSeptember 2004. Mr. Macaluso also served on theBoard of Directors of Isolagen from June 2001 untilApril 2005. From October 1998 until June 2001,Mr. Macaluso was the owner of Page InternationalCommunications, a manufacturing business.Mr. Macaluso was a founder and Principal ofInternational Printing and Publishing, a positionMr. Macaluso held from 1989 until 1997, when hesold that business to a private equity firm. March 2010 Mr. Macaluso’s experience in executivemanagement and marketing within thepharmaceutical industry, monetizing companyopportunities and corporate finance led to theconclusion of our Board of Directors that he shouldserve as a director of our company considering ourbusiness and structure. 38 (4)Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsName Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SinceDavidBar-Or,MD 70 Director and FormerChief Scientific Officer Dr. Bar-Or served as our Chief Scientific Officer fromMarch 2010 until September 2018. Dr. Bar-Or alsoserved as our chairman of the Board fromMarch 2010 until May 2010. From April 2009 untilMarch 2010, he served as chairman of the Board andChief Scientific Officer of Life Sciences. Dr. Bar-Oris currently the director of Trauma Research atSwedish Medical Center, Englewood, Colorado, St.Anthony’s Hospital, Lakewood, Colorado and TheMedical Center of Plano, Plano, Texas. Dr. Bar-Or isthe founder of Ampio Pharmaceuticals, Inc. Dr. Bar-Or was principally responsible for all patented andproprietary technologies acquired by us fromBioSciences in April 2009. He was also responsiblefor all patents issued and applied for since then,having been issued over 270 patents and havingfiled or co-filed almost 120 patent applications.Dr. Bar-Or has authored or co-authored over 160peer-reviewed journal articles and several bookchapters. Dr. Bar-Or is a reviewer for over 45 peerreviewed scientific and clinical journals. He is therecipient of the Gustav Levi Award from the MountSinai Hospital, New York, New York, the KornfeldAward for an outstanding MD Thesis, theOutstanding Resident Research Award from theDenver General Hospital, and the OutstandingClinician Award for the Denver General MedicalEmergency Resident Program. Dr. Bar-Or receivedhis medical degree from The Hebrew University,Hadassah Medical School, Jerusalem, Israel,following which he completed a biochemistryfellowship at Hadassah Hospital under ProfessorAlisa Gutman and undertook post-graduateresidency training at Denver Health Medical Center,specializing in emergency medicine, a discipline inwhich he is board certified. He completed the firstresearch fellowship in Emergency Medicine atDenver Health Medical Center under the direction ofProfessor Peter Rosen. March 2010 Among other experience, qualifications, attributesand skills, Dr. Bar-Or’s medical training, extensiveinvolvement and inventions in researching anddeveloping Ampion, and leadership role in hishospital affiliations led to the conclusion of ourBoard of Directors that he should serve as a directorof our company considering our business andstructure. 39 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsName Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SincePhilip H.Coelho 75 Director Mr. Coelho has served as a member of our Board ofDirectors since April 2010. Mr. Coelho has been inthe senior management of high technologyconsumer electronic or medical device companiesfor over 30 years. Mr. Coelho is the ChiefTechnology Officer and Co-Founder of SynGen Inc.,a firm inventing and commercializing products thatharvest stem and progenitor cells derived from adonor or the patient’s own body to treat humandisease. Prior to founding SynGen Inc. inOctober 2009, Mr. Coelho was the President andCEO of PHC Medical, Inc., a consulting firm, fromAugust 2008 through October 2009. FromAugust 2007 through May 2008, Mr. Coelho servedas the Chief Technology Architect ofThermoGenesis Corp., a medical products companyhe founded in 1986 that focused on the regenerativemedicine market. From 1989 through July 2007, hewas Chairman and CEO of ThermoGenesis Corp.Mr. Coelho served as Vice President of Research &Development of ThermoGenesis from 1986 through1989. He was President of Castleton Inc. from 1982to 1986, and President of ESS Inc. from 1971 to1982. Mr. Coelho also serves as a member of theboard of directors of NASDAQ-listed company,Catalyst Pharmaceuticals Partners, Inc. (CPRX)(since October 2002), and served as a member of theBoard of Directors of NASDAQ-listed MediwareInformation Systems, Inc. (MEDW) (fromDecember 2001 until July 2006, and commencingagain in May 2008 until it was sold inDecember 2012). Mr. Coelho received a B.S. degreein thermodynamic and mechanical engineering fromthe University of California, Davis and has beenawarded more than 50 U.S. patents in the areas ofcell cryopreservation, cryogenic robotics, cellselection, blood protein harvesting and surgicalhomeostasis. April 2010 Mr. Coelho’s long tenure as a CEO of a publicmedical device company, as director of a publicpharmaceutical company, prior and current publiccompany board experience, and knowledge ofcorporate finance and governance as an executiveand director, as well as his demonstrated success indeveloping patented technologies, led to theconclusion of our Board of Directors that he shouldserve as a director of our company considering ourbusiness and structure. 40 (1)(2)(3)(4)Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsName Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SinceRichardB. Giles 69 Director Mr. Giles, CPA, has served as a member of our Boardof Directors since August 2010. Mr. Giles is theChief Financial Officer, or CFO, of Ludvik ElectricCo., an electrical contractor headquartered inLakewood, Colorado, a position he has held since1985. Ludvik Electric is a private electricalcontractor that has completed electrical contractingprojects throughout the United States, South Africaand Germany. As CFO and Treasurer of LudvikElectric, Mr. Giles oversees accounting, riskmanagement, financial planning and analysis,financial reporting, regulatory compliance, and tax-related accounting functions. He serves also as thetrustee of Ludvik Electric Co.’s 401(k) plan. Prior tojoining Ludvik Electric, Mr. Giles was an AuditPartner for three years with Higgins Meritt &Company, then a Denver, Colorado CPA firm, andduring the preceding nine years he was an AuditManager and a member of the audit staff of PriceWaterhouse, one of the legacy firms which nowcomprises PricewaterhouseCoopers. While with PriceWaterhouse, Mr. Giles participated in a number ofpublic company audits, including one for a leadingcomputer manufacturer. Mr. Giles received a B.S.degree in accounting from the University ofNorthern Colorado. He is a member of the AmericanInstitute of Certified Public Accountants, ColoradoSociety of Certified Public Accountants,Construction Financial Management Associationand Financial Executives International. August 2010 Mr. Giles’ experience in executive financialmanagement, accounting and financial reporting,corporate accounting and internal controls led to theconclusion of our Board of Directors that he shouldserve as a director of our company considering ourbusiness and structure. 41 (1)(2)(3)(4)Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsName Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SinceDavid R.Stevens,Ph.D. 69 Director Dr. Stevens has served as a member of our Board ofDirectors since June 2011. Dr. Stevens has worked inthe FDA regulated life science industries since 1978.He has been a board member of Cetya, Inc. sinceNovember 2013. He has served on the boards ofseveral other public and private life sciencecompanies, including Micro-Imaging Solutions,LLC (2007-2018), Poniard Pharmaceuticals, Inc.(2006‑2012), Aqua Bounty Technologies, Inc.(2002‑2012), and Smart Drug Systems, Inc.(1999‑2006), and was an advisor to Bay City Capitalfrom 1999 to 2006. Dr. Stevens was previouslyPresident and CEO of Deprenyl Animal Health, Inc.,a public veterinary pharmaceutical company, from1990 to 1998, and Vice President, Research andDevelopment, of Agrion Corp., a privatebiotechnology company, from 1986 to 1988. Hebegan his career in pharmaceutical research anddevelopment at the former Upjohn Company, wherehe contributed to the preclinical evaluation ofXanax and Halcion. Dr. Stevens received B.S. andD.V.M. degrees from Washington State University,and a Ph.D. in Comparative Pathology from theUniversity of California, Davis. He is a Diplomate ofthe American College of Veterinary Pathologists. June 2011 Dr. Stevens’ experience in executive management inthe pharmaceutical industry and knowledge of themedical device industry led to the conclusion of ourBoard of Directors that he should serve as a directorof our company considering our business andstructure. ThomasE.ChilcottIII 51 Chief FinancialOfficer, Treasurer andSecretary Prior to taking his current role, Mr. Chilcott servedas our Controller. Mr. Chilcott was the President andChief Financial Officer of Chilcott ConsultingGroup from September 2006 to December 2016.Mr. Chilcott began his career as an auditor withKPMG Peat Marwick. He graduated from VillanovaUniversity with a BS of Administration inAccountancy and is a Certified Public Accountant ingood standing. Mr. Chilcott is a member of theColorado Society of Certified Public Accountants. June 2017 42 (1)(2)(3)(4)(4)Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsName Age Position With Ampio Principal Occupation and Areas ofRelevant Experience For Directors Director/Officer SinceHolliCherevka 35 Chief Operating Officer Prior to taking her current role, Ms. Cherevka servedas our Vice President of Operations and oversaw theclinical, regulatory and manufacturing operations.She has held roles of increasing responsibilitythroughout her career at Ampio including siteleadership, strategic planning, contractormanagement and product portfolio leadership.Previously, Ms. Cherevka was the Director ofBusiness Development at the American College ofRadiology (ACR) Image Metrix. Ms. Cherevkaearned a Bachelor of Arts from California StateUniversity, Chico, and holds a Master of Science inBiomedical and Molecular Sciences Research fromKing’s College, London. Ms. Cherevka is a memberof the Parenteral Drug Association, ColoradoBioscience Association and the InternationalSociety of Pharmaceutical Engineers. She hasrepresented Ampio Pharmaceuticals at conferencesfor the International Society of PharmaceuticalEngineers as well as at Global InvestmentConferences. September 2017 (1)Member of our Audit Committee(2)Member of our Compensation Committee(3)Member of our Nominating and Governance Committee(4)Member of our Disclosure Committee Family RelationshipsThere are no family relationships between any of our directors. Raphael Bar-Or, a non-executive officer, is the son of DavidBar-Or, our former Chief Scientific Officer and a Director.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own greater than10% of our Common Stock to file certain reports, Forms 3, 4 and 5, with the SEC with respect to ownership and changes inownership of our Common Stock. To our knowledge, we have one shareholder who beneficially owns more than 10% of ourCommon Stock. See Item 12 for further information on beneficial ownership. Based solely on our review of the copies ofsuch forms received by us, or written representations from certain reporting persons, we believe during the period fromJanuary 1, 2018 to December 31, 2018, all filing requirements applicable to our officers, directors and 10% beneficial ownerswere complied with.Code of Business Conduct and EthicsWe have adopted a code of business conduct and ethics that is applicable to all our employees, officers and directors. Thecode is available on our web site, www.ampiopharma.com, under the “Investor Relations” tab. We intend to disclose futureamendments to, or waivers from, certain provisions of our code of ethics, if any, on the above website within fourbusiness days following the date of such amendment or waiver.MeetingsDuring the year ended December 31, 2018, there were (i) eight meetings of the Board of Directors, (ii) four meetings of theAudit Committee, (iii) seven meetings of the Compensation Committee, (iv) one meeting of the Nominating and GovernanceCommittee, and (v) no meetings of the Disclosure Committee insofar as the committee was not formally established until late2018. No incumbent director attended fewer than seventy-five percent (75%) of the aggregate of43 (4)Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(1) the total number of meetings of the Board, and (2) the total number of meetings held by all committees of the Boardduring the period that such director served.Annual Meeting Attendance, Executive Sessions and Shareholder CommunicationsSince 2011, our policy has been that our directors attend the annual meeting of stockholders. We previously did not have apolicy concerning director attendance at annual meetings. Commencing in 2011, our policy has also been that our non-employee directors are required to meet in separate sessions without management on a regularly scheduled basis four timesa year. Generally, these meetings are expected to take place in conjunction with regularly scheduled meetings of the Boardthroughout the year. Our 2018 annual meeting was attended by four of the five directors serving on our Board.We have not implemented a formal policy or procedure by which our shareholders can communicate directly with our Boardof Directors. Nevertheless, every effort has been made to ensure that the views of shareholders are heard by the Board ofDirectors or individual directors, as applicable, and that appropriate responses are provided to shareholders in a timelymanner. We believe that we are responsive to shareholder communications, and therefore have not considered it necessary toadopt a formal process for shareholder communications with our Board. During the upcoming year, our Board will continueto monitor whether it would be appropriate to adopt such a policy. Communications will be distributed to the Board, or toany individual director or directors as appropriate, depending on the facts and circumstances outlined in thecommunications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:·junk mail and mass mailings·resumes and other forms of job inquiries·surveys; and·solicitations or advertisements.In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that anycommunication that is excluded will be made available to any outside director upon request.Involvement in Certain Legal ProceedingsNo director, executive officer, promoter or person of control of our Company has, during the last ten years: (i) been convictedin or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been aparty to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedingwas or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activitiessubject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limitinginvolvement in any business activity, or finding of any violation with respect to such law, nor (iii) any bankruptcy petitionbeen filed by or against the business of which such person was an executive officer or a general partner, whether at the time ofthe bankruptcy or for the two years prior thereto.We are not engaged in, nor are we aware of any pending or threatened litigation in which any of our directors, executiveofficers, affiliates or owner of more than 5% of our common stock is a party adverse to us or has a material interest adverse tous.Leadership Structure of the BoardThe Board of Directors does not currently have a policy on whether the same person should serve as both the Chief ExecutiveOfficer and Chairman of the Board or, if the roles are separate, whether the chairman should be selected from the non-employee directors or should be an employee. The Board believes that it should have the flexibility to make thesedeterminations in a way that it believes provides the best leadership for the Company. Our current chairman, MichaelMacaluso, was appointed our Chief Executive Officer effective January 2012. Mr. Macaluso has served as a member of ourBoard since March 2010 and had been a member of the Board of Directors of Life Sciences from December 2009.44 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRisk OversightThe Board oversees risk management directly and through its committees associated with their respective subject matterareas. Generally, the Board oversees risks that may affect our business, including operational matters. The Audit Committeeis responsible for oversight of our accounting and financial reporting processes and discusses with management our financialstatements, internal controls and other accounting and auditing matters. The Compensation Committee oversees certain risksrelated to compensation programs and the Nominating and Governance Committee oversees certain corporate governancerisks. The Disclosure Committee assists in establishing, implementing, maintaining and evaluating controls or otherprocedures to ensure that the information required to be disclosed in the Company’s reports furnished or filed under theSecurities Exchange Act of 1934 is properly communicated to the chief executive officer and the chief financial officer. Aspart of their roles in overseeing risk management, these committees periodically report to the Board regarding briefingsprovided by management and advisors as well as the committees’ own analysis and conclusions regarding certain risks facedby us. Management is responsible for implementing the risk management strategy and developing policies, controls,processes and procedures to identify and manage risks.Committees of the BoardOur Board of Directors has an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, anda Disclosure Committee, each of which has the composition and the responsibilities described below. The Audit Committee,Compensation Committee, Nominating and Governance Committee, and Disclosure Committee all operate under chartersapproved by our Board of Directors, which charters are available on our website.Audit Committee. Our Audit Committee oversees our corporate accounting and financial reporting process. This committeealso assists the Board of Directors in monitoring our financial systems and our legal and regulatory compliance. Our AuditCommittee is responsible for, among other things:·selecting and hiring our independent auditors;·appointing, compensating and overseeing the work of our independent auditors;·approving engagements of the independent auditors to render any audit or permissible non-audit services;·reviewing the qualifications and independence of the independent auditors;·monitoring the rotation of partners of the independent auditors on our engagement team as required by law;·reviewing our financial statements and reviewing our critical accounting policies and estimates;·reviewing the adequacy and effectiveness of our internal controls over financial reporting;·reviewing and discussing with management and the independent auditors the results of our annual audit, ourquarterly financial statements and our publicly filed reports; and·reviewing related party transactions.The members of our Audit Committee are Messrs. Giles, Coelho and Stevens. Mr. Giles is our Audit Committee chairman andwas appointed to our Audit Committee in August 2010. Our Board of Directors has determined that each member of the AuditCommittee meets the financial literacy requirements of the national securities exchanges and the SEC, and Mr. Gilesqualifies as our Audit Committee financial expert as defined under SEC rules and regulations. Our Board of Directors hasconcluded that the composition of our Audit Committee meets the requirements for independence under the currentrequirements of the NYSE American and SEC rules and regulations. We believe that the functioning of our Audit Committeecomplies with the applicable requirements of SEC rules and regulations, and applicable requirements of the NYSE American.45 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCompensation Committee. Our Compensation Committee oversees our corporate compensation policies, plans and programs.The Compensation Committee is responsible for, among other things:·reviewing and recommending policies, plans and programs relating to compensation and benefits of ourdirectors, officers and employees;·reviewing and recommending compensation and the corporate goals and objectives relevant to compensation ofour Chief Executive Officer;·reviewing and approving compensation and corporate goals and objectives relevant to compensation forexecutive officers other than our Chief Executive Officer;·evaluating the performance of our executive officers considering established goals and objectives;·developing and periodically reviewing with our Board of Directors a succession plan for our Chief ExecutiveOfficer; and·administering our equity compensations plans for our employees and directors.The members of our Compensation Committee are Messrs. Coelho, Giles and Stevens. Mr. Coelho is the chairman of ourCompensation Committee. Each member of our Compensation Committee is a non-employee director, as defined inRule 16b‑3 promulgated under the Exchange Act, is an outside director, as defined pursuant to Section 162(m) of the InternalRevenue Code of 1986, as amended, or the Code, and satisfies the independence requirements of the NYSE American. Webelieve that the composition of our Compensation Committee meets the requirements for independence under, and thefunctioning of our Compensation Committee complies with, any applicable requirements of the NYSE American and SECrules and regulations.Our Compensation Committee and the Board of Directors have not yet established a succession plan for our Chief ExecutiveOfficer. Mr. Macaluso is in excellent health and is performing to the satisfaction of the Board of Directors. Therefore, theCompensation Committee does not believe there is a pressing need to have a succession plan for the CEO position.In fulfilling its responsibilities, the Committee is permitted under the Compensation Committee charter to delegate any or allof its responsibilities to a subcommittee comprised of members of the Compensation Committee or the Board, except that theCommittee may not delegate its responsibilities for any matters that involve compensation of any officer or any matterswhere it has determined such compensation is intended to comply with Section 162(m) of the Code or is intended to beexempt from Section 16(b) under the Exchange Act pursuant to Rule 16b‑3 by virtue of being approved by a committee ofindependent or nonemployee directors.Nominating and Governance Committee. Our Nominating and Governance Committee oversees and assists our Board ofDirectors in reviewing and recommending corporate governance policies and nominees for election to our Board of Directors.The Nominating and Governance Committee is responsible for, among other things:·evaluating and making recommendations regarding the organization and governance of the Board of Directorsand its committees;·assessing the performance of members of the Board of Directors and making recommendations regardingcommittee and chair assignments;·recommending desired qualifications for Board of Directors membership and conducting searches for potentialmembers of the Board of Directors; and·reviewing and making recommendations for our corporate governance guidelines.The members of our Nominating and Governance Committee are currently Messrs. Giles, Stevens and Coelho. Mr. Coelho isthe chairman of our Nominating and Governance Committee. Our Board of Directors has determined that46 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentseach member of our Nominating and Governance Committee is independent within the meaning of the independent directorguidelines of the NYSE American.Disclosure Committee. Our Disclosure Committee provides assistance to the CEO and the CFO, or the Senior Officers, infulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy,completeness and timeliness of such disclosures. The Disclosure Committee is responsible for, among other things:·designing, adopting and maintaining appropriate procedures and standards that are designed to ensure that: (i)information that we are required to disclose to the SEC, and other written information that we will disclose tothe public is recorded, processed, summarized and reported accurately and on a timely basis; (ii) risks and riskfactors are adequately disclosed; and (iii) such information is accumulated and communicated to ourmanagement, including our Senior Officers, as appropriate, to allow timely decisions regarding requireddisclosure (the “Disclosure Controls”);·monitoring the integrity and evaluating the effectiveness of the Disclosure Controls;·reviewing our: (i) Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form8-K, proxy statement, material registration statements, and any other information filed with the SEC; (ii) pressreleases containing financial information, earnings guidance, information about material developments, or otherinformation material to our security holders; and (iii) correspondence broadly disseminated to shareholders andall presentations to analysts and the investment community (collectively, the “Covered Reports”);·discussing with the Senior Officers all relevant information relative to the Disclosure Committeesresponsibilities and proceedings, including: (i) the preparation of our disclosures in the Covered Reports; (ii)the evaluation of the effectiveness of the Disclosure Controls; and (iii) any false statement or omission ofmaterial fact discovered upon review of a Covered Report; and·providing or overseeing an annual mandatory training session to our Board of Directors and employees, whichshall include coverage of the following topics: (i) risk assessment and compliance, (ii) our Code of Ethics, (iii)any and all manuals or policies established by us concerning legal or ethical standards of conduct to beobserved in connection with work performed for the Company, and (iv) the obligations of the DisclosureCommittee and the rules, regulations and other factors that impact disclosures contained in the CoveredReports.The members of our Disclosure Committee are currently Messrs. Macaluso, Chilcott, Giles, Coelho and Dr. Stevens, as well asMs. Cherevka. Dr. Stevens is the chairman of our Disclosure Committee.Our Board of Directors may from time to time establish other committees.47 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNon-Employee Director CompensationOur Compensation Committee established the following fees for payment to members of our Board of Directors orcommittees, for the fiscal year ended December 31, 2018: Cash Common Committee or Committees Compensation StockBoard Annual Retainer: Chairman $20,000 Each non-employee director $10,000 Board Meeting Fees: Each meeting attended in-person $1,500 Each meeting attended telephonically orvia web $1,000 Committee Annual Retainer: Chairman of each committee Audit; Compensation; Nominating and Governance $20,000 Each non-chair member Audit $12,000 Each non-chair member Compensation; Nominating and Governance $10,000 Committee Chairman Meeting Fees: Each meeting attended in-person Audit; Compensation; Nominating and Governance $2,500 Each meeting attended telephonically orvia web Audit; Compensation; Nominating and Governance $1,500 Committee Member Meeting Fees: Each meeting attended in-person Audit; Compensation; Nominating and Governance $1,500 Each meeting attended telephonically orvia web Audit; Compensation; Nominating and Governance $1,000 Annual Stock Award: $20,000 The Non-Employee Director Compensation for fiscal 2018 included a grant to each Director of options to purchase 30,000shares of our common stock on the date of our annual shareholder meeting of stockholders, vesting monthly over thesucceeding twelve months. The 2018 annual meeting occurred on December 15, 2018.Director Compensation for 2018The table below summarizes the compensation paid by us to non-employee directors for the year ended December 31, 2018.Our employee directors do not receive additional compensation for their services as a member of our Board of Directors. Fees Earned or Stock Option Stock Awards All Other Name Paid in Cash Awards (1) (2) Compensation TotalPhilip H. Coelho (3) $86,500 $10,337 $20,000 $ — $116,837Richard B. Giles (4) $77,000 $10,337 $20,000 $ — $107,337David Stevens, Ph.D. (5) $65,000 $10,337 $20,000 $ — $95,337(1)On December 15, 2018, the date of the 2018 annual meeting, each of Messrs. Coelho, Giles and Dr. Stevens was grantedoptions to purchase 30,000 shares of common stock. These options have an exercise price of $0.40 per share. Theseoptions vest over 12 months and have a term of 10 years from the grant date. The amounts reported under “Stock OptionAwards” in the above table reflect the grant date fair value of these awards as determined in accordance with theFinancial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – StockCompensation. The value of stock option awards was estimated using the Black-Scholes option pricing model. Thevaluation assumptions used in the valuation of options granted may be found in Note 8 to our financial statementsincluded in this annual report on Form 10-K for the year ended December 31, 2018.48 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(2)On January 2, 2018, each of Messrs. Coelho, Giles and Dr. Stevens was awarded 5,747 shares of common stock under the2010 Plan, at a price of $3.48 which was the closing price of our common stock on the date of grant per share, equivalentto $20,000. Since fiscal 2012, the aggregate number of stock awards to each Messrs. Coelho, Giles and Dr. Stevenstotaled 41,536 shares of common stock with a value of $100,000.(3)The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2018 for Mr.Coelho was 685,554, of which 655,554 were fully vested.(4)The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2018 for Mr. Gileswas 770,000, of which 740,000 were fully vested.(5)The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2018 for Dr.Stevens was 345,000, or which 315,000 were fully vested. Item 11.Executive CompensationExecutive CompensationNamed Executive OfficersFor our fiscal year ended December 31, 2018, our Named Executive Officers were: (i) Michael Macaluso, our Chief ExecutiveOfficer, who has served as our Chief Executive Officer since January 2012, (ii) Thomas E. Chilcott, our Chief FinancialOfficer, who has served as our Chief Financial Officer, Secretary and Treasurer since June 2017, (iii) David Bar-Or, M.D., ourformer Chief Scientific Officer, who served as our Chief Scientific Officer from March 2010 to September 2018, and (iv) HolliCherevka, our current Chief Operating Officer, who has served as our Chief Operating Officer since September 2017. We hadno other executive officers serving during the year ended December 31, 2018.The following table shows for the fiscal years ended December 31, 2018 and December 31, 2017, compensation awarded to,paid to, or earned by our Name Executive Officers.Summary Compensation of Named Executive Officers Option Stock Awards Name and Principal Position Year Salary ($) Bonus ($) Award ($) ($)(1) Total ($)(a) (b) (c) (d) (e) (f) (j)Named Executive Officers Michael Macaluso Chief Executive Officer 2018 300,000 5,000 — — 305,000effective January 2012 2017 300,000 5,000 — 268,016 573,016 David Bar-Or, M.D. Former Chief Scientific Officer and 2018 228,218 — — — 228,218Chairman 2017 300,000 5,000 — 46,728 351,728 Thomas E. Chilcott Chief Financial Officer 2018 225,000 30,000(2) — 34,472(3), (4)289,472effective June 2017 2017 166,458(5)55,000(6) — 170,386 391,844 Holli Cherevka Chief Operating Officer 2018 200,000 5,000 — 22,383(4)227,383effective September 2017 2017 187,195(7)45,000(8) — 91,887 324,082 (1)The amounts reported under “Option Awards” in the above table reflect the grant date fair value of these awards asdetermined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic718, Compensation – Stock Compensation, rather than amounts paid to or realized by the named individual. The valueof the option awards was estimated using the Black-Scholes option pricing model. The valuation assumptions used inthe valuation of options granted may be found in Note 8 to our financial statements included in this annual report onForm 10-K for the year ended December 31, 2018.(2)Mr. Chilcott received a $25,000 bonus based on his employment agreement for his involvement in raising non-dilutivefunds through warrant exercises.49 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(3)Mr. Chilcott was granted 75,000 options due to his performance in fiscal year 2018 and the value of the option awardtotaled $33,000, which was recognized in the period ended September 30, 2018.(4)The Compensation Committee approved a one-time option repricing where the exercise price of each relevant optionwas amended to reduce such exercise price to $0.75. “Relevant Options” are all outstanding stock options as of October1, 2018 (vested or unvested) to acquire shares of our common stock that have exercise prices above $0.75; provided,however, that the maximum dollar value of the repricing for any individual will not exceed $500,000 (with such valuecalculated by multiplying (i) the difference between the initial exercise price and $0.75 by (ii) the number of optionsbeing repriced (see further information in Note 8 of the financial statements and within the Outstanding Equity Awardstable contained in this section). The value of repricing the options for Mr. Chilcott and Ms. Cherevka totaled $1,400and $22,400, respectively, and these amounts were recognized in the period ended December 31, 2018. (5)Mr. Chilcott was appointed interim Chief Financial Officer, effective June 2017 and Chief Financial Officer, effectiveAugust 2017.(6)Mr. Chilcott received a $50,000 bonus based on his employment agreement for the October 2017 Securities PurchaseAgreement.(7)Ms. Cherevka was appointed Chief Operating Officer, effective September 2017.(8)Ms. Cherevka received a $40,000 bonus related to her performance during 2016, which was paid out during 2017. Our executive officers are reimbursed by us for any out-of-pocket expenses incurred in connection with activities conductedon our behalf.Employment AgreementsWe entered into an employment agreement with Mr. Michael Macaluso, our Chief Executive Officer, effective January 9,2012. This agreement provided for an annual salary of $195,000, with an initial term ending January 9, 2015. On October 1,2013, we increased Mr. Macaluso’s annual salary from $195,000 to $300,000. On December 20, 2014, we extended theemployment agreement of Mr. Macaluso for three additional years, expiring January 9, 2017. On March 9, 2017, we extendedhis employment agreement for another three years until January 9, 2020. In connection with his 2017 Amendment,Mr. Macaluso was awarded 400,000 options to purchase our common stock at an exercise price of $0.81 vesting annuallyover three years beginning on March 9, 2018.In August 2010, we entered into an employment agreement with Dr. David Bar-Or, our former Chief Scientific Officer, orCSO. The employment agreement with Dr. Bar-Or superseded his prior agreement with Life Sciences. The agreement had aninitial term ending July 31, 2013. The agreement provided for an annual salary of $300,000. On July 15, 2013, we extendedthe employment agreement of Dr. David Bar-Or for one additional year, expiring July 31, 2014. In connection with thisamendment, Dr. Bar-Or was awarded 300,000 options to purchase our common stock at an exercise price of $6.15 with 50%vesting upon grant and 50% after one year. On August 11, 2014, we extended the employment agreement of Dr. Bar-Or forone additional year, expiring July 31, 2015. In connection with this amendment, Dr. Bar-Or was awarded 300,000 options topurchase our common stock at an exercise price of $6.48 with 50% vesting upon grant and 50% after one year. On August 3,2015, we extended the employment agreement of Dr. Bar-Or for one additional year, expiring July 31, 2016. In connectionwith this amendment, Dr. Bar-Or was awarded 300,000 options to purchase our common stock at an exercise price of $2.60with such options vesting on the date that we meet all endpoints in connection with the Ampion clinical trial as determinedin the sole discretion of our Compensation Committee. We did not meet the primary end point on the Ampion trial, so theoptions granted to Dr. Bar-Or in July 2015 expired unvested on June 30, 2016. On August 1, 2016, we extended theemployment agreement of Dr. Bar-Or for one additional year, which expired on July 31, 2017. On June 30, 2017, weextended the Employment Agreement of Dr. Bar-Or for one additional year, expiring July 1, 2018. In connection with thisagreement, Dr. Bar-Or was awarded 133,000 options to purchase our common stock at an exercise price of $0.50 with 100%vesting immediately. In July 2018, we extended the employment agreement of Dr. Bar-Or for an additional month. OnAugust 29, 2018, Dr. Bar-Or notified us of his decision to retire from his role as CSO, effective September 30, 2018. Dr. Bar-Or will continue to serve as a member of the Board of Directors and the Scientific Advisory Board.We entered into an employment agreement with Mr. Thomas Chilcott, our Chief Financial Officer, on August 23, 2017,which provided for an annual salary of $200,000 and a term ending August 16, 2019. In connection with this employmentagreement, Mr. Chilcott was awarded 200,000 options to purchase common stock at an exercise price of50 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents$0.48, with 50% vesting upon grant and 50% after one year. On December 29, 2017, the Compensation Committee approveda salary increase for Mr. Chilcott of $25,000, effective January 1, 2018. We entered into an employment agreement with Ms. Holli Cherevka, our Chief Operating Officer, on September 19, 2017,which provided for an annual salary of $200,000 and a term ending September 19, 2019. In connection with this employmentagreement, Ms. Cherevka was awarded 200,000 options to purchase common stock at an exercise price of $0.55, with 50%vesting upon grant and 50% after one year.Each officer is eligible to receive a discretionary annual bonus each year that will be determined by the CompensationCommittee of the Board of Directors based on individual achievement and Company performance objectives established bythe Compensation Committee. Included in those objectives, as applicable for the responsible officer, are (i) obtainingsuccessful clinical trial results, (ii) preparation and compliance with a fiscal budget, (iii) the sale of intellectual property notselected for clinical trials by us at prices, and times, approved by the Board of Directors and (iv) making significant scientificdiscoveries acceptable to the Board of Directors. The targeted amount of the annual bonus for Mr. Macaluso, Mr. Chilcottand Ms. Cherevka is 50% of the applicable base salary, although the actual bonus may be higher or lower. Outstanding Equity AwardsThe following table provides a summary of equity awards outstanding for each of the Named Executive Officers as ofDecember 31, 2018: Option Awards Stock Awards Equity Equity Incentive Incentive Plan Plan Awards: Equity Incentive Awards: Market or Number of Plan Awards: Number of Payout Value Number of Securities Number of Unearned of Unearned Securities Underlying Securities Number of Market Value Shares, Units Shares, Units Underlying Unexercised Underlying Shares or of Shares or or Other or Other Unexercised Options Unexercised Option Option Units of Stock Units of Stock Rights That Rights That Options Exercisable Unexercisable Unearned Exercise Expiration That Have Not That Have Not Have Not Have Not Name (#) (#) Options (#) Price ($) Date Vested (#) Vested ($) Vested (#) Vested ($)(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Current Named Executive Officers Michael Macaluso 133,333 266,667(1) — 0.81 3/9/2027 — — — —Michael Macaluso 180,000(2) — — 3.46 12/20/2024 — — — —Michael Macaluso 250,000 — — 2.76 5/7/2022 — — — —Michael Macaluso 180,000 — — 1.70 8/27/2020 — — — —Michael Macaluso 220,000 — — 1.03 8/12/2020 — — — —David Bar-Or, M.D. — — — — 12/29/2018 David Bar-Or, M.D. — — — — 12/29/2018 — — — —David Bar-Or, M.D. — — — — 12/29/2018 — — — —David Bar-Or, M.D. — — — — 12/29/2018 — — — —David Bar-Or, M.D. — — — — 12/29/2018 — — — —Thomas E. Chilcott 75,000 — — 0.51 9/20/2028 Thomas E. Chilcott 200,000 — — 0.48 8/23/2027 — — — —Thomas E. Chilcott 66,666 33,334(3) — 0.60 6/15/2027 — — — —Thomas E. Chilcott 50,000 25,000(4) — 0.75(5)1/18/2027 — — — —Holli Cherevka 200,000 — — 0.55 9/19/2027 — — — —Holli Cherevka 30,000 — — 0.51 8/8/2027 — — — —Holli Cherevka 170,000 — — 0.75(5)7/15/2026 — — — —Holli Cherevka 30,000 — — 0.75(5)10/6/2024 — — — —Holli Cherevka 9,402 — — 0.75(5)11/8/2023 — — — —Holli Cherevka 70,598 — — 8.62 11/8/2023 Holli Cherevka 45,000 — — 0.75(5)4/2/2023 — — — —Holli Cherevka 35,000 — — 0.75(5)1/14/2023 — — — —(1)The unexercisable options vest annually starting on the first anniversary of the grant date and become fully vested onMarch 9, 2020. The option awards remain exercisable until they expire ten years from the date of grant subject to earlierexpiration following termination of employment.(2)A total of 220,000 vested options were forfeited as of August 8, 2017.(3)The unexercisable options vest annually starting on the grant date and become fully vested on June 15, 2019. Theoption awards remain exercisable until they expire ten years from the date of grant subject to earlier expirationfollowing termination of employment.51 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(4)The unexercisable options vest annually starting on the grant date and become fully vested on January 18, 2019. Theoption awards remain exercisable until they expire ten years from the date of grant subject to earlier expirationfollowing termination of employment.(5)These options were included in the one-time option repricing on October 1, 2018 (see further information in Note 8 inthe financial statements). Potential Payments upon Termination or Change in ControlIf the employment of Mr. Chilcott or Ms. Cherevka is terminated at our election at any time, for reasons other than death,disability, cause (as defined in the agreement) or a voluntary resignation, or if the officer terminates their employment forgood reason, the officer in question shall be entitled to receive a lump sum severance payment equal to one and a half timesor one half times their base salary, respectively and of the continued payment of premiums for continuation of the officer’shealth and welfare benefits pursuant to COBRA or otherwise, for a period of two years from the date of termination, subject toearlier discontinuation if the officer is eligible for comparable coverage from a subsequent employer. Mr. Macaluso is notentitled to any such termination payments pursuant to the terms of his employment agreement. All severance payments, lessapplicable withholding, are subject to the officer’s execution and delivery of a general release of us and our affiliates andeach of their officers, directors, employees, agents, successors and assigns in a form acceptable to us, and a reaffirmation ofthe officer’s continuing obligation under the propriety information and inventions agreement (or an agreement without thattitle, but which pertains to the officer’s obligations generally, without limitation, to maintain and keep confidential all of ourproprietary and confidential information, and to assign all inventions made by the officer to us, which inventions are made orconceived during the officer’s employment). If the employment is terminated for cause, no severance shall be payable by us.“Good Reason” means:·a material reduction in the officer’s overall responsibilities or authority or scope of duties;·a material reduction of the officer’s compensation; or·relocation of the officer to a facility or location not within 40 miles of the state capitol building in Denver,Colorado.“Cause” means:·willful malfeasance or willful misconduct in connection with employment;·conviction of, or entry of a plea of guilty or nolo contendere to, any crime other than a traffic violation ormisdemeanor;·willful and deliberate violation of a company policy;·unintended but material breach of any written policy applicable to all employees which is not cured within 30business days;·unauthorized use or disclosure of any proprietary information or trade secrets of the company;·willful and deliberate breach of the employment agreement;·any other material breach of the employment agreement which is not cured within 30 business days; or·gross negligence in the performance of duties.52 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents“Change in Control” means the occurrence of any of the following events:·The acquisition by an individual, entity, or group, other than us or any of our subsidiaries, of beneficialownership of 50% or more of the combined voting power or economic interests of our then outstanding votingsecurities entitled to vote generally in the election of directors (excluding any issuance of securities by us in atransaction or series of transactions made principally for bona fide equity financing purposes);·The acquisition of us by another entity by means of any transaction or series of related transactions to which weare a party (including, without limitation, any stock acquisition, reorganization, merger or consolidation butexcluding any issuance of securities by us in a transaction or series of related transactions made principally forbona fide equity financing purposes) other than a transaction or series of related transactions in which theholders of our voting securities outstanding immediately prior to such transaction or series of relatedtransactions retain, immediately after such transaction or series of related transactions, as a result of our sharesheld by such holders prior to such transaction or series of related transactions, at least a majority of the totalvoting power represented by our outstanding voting securities or such other surviving or resulting entity (or ifwe are or such other surviving or resulting entity is a wholly-owned subsidiary immediately following suchacquisition, its parent); or·The sale or other disposition of all or substantially all our assets in one transaction or series of relatedtransactions.In the event of a Change of Control, all outstanding stock options, restricted stock and other stock-based grants held byMr. Macaluso, Mr. Chilcott and Ms. Cherevka become fully vested and exercisable, and all such stock options remainexercisable from the date of the Change in Control until the expiration of the term of such stock options.Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by the consummation of anytransaction or series of integrated transactions immediately following which the record holders of our common stockimmediately prior to such transaction or series of transactions continue to have substantially the same proportionateownership in an entity which owns all or substantially all of our assets immediately following such transaction or series oftransactions.The employment agreements do not provide for the payment of a “gross-up” payment under Section 280G of the Code. Thefollowing table provides estimates of the potential severance and other post-termination benefits that each of Mr. Macaluso,Mr. Chilcott and Ms. Cherevka would have been entitled to receive assuming their respective employment was terminated asof December 31, 2018 for the reason set forth in each of the columns. Cause; Without good Without Cause; Good Recipient and Benefit reason; reason Death; Disability Change in Control Michael Macaluso Stock Options (1) $ — $ — $ — $ —Total $ — $ — $ — $ — Thomas Chilcott Salary $ — $337,500 $ — $ —Stock Options (1) — — — —Value of health benefits provided aftertermination (2) — 81,512 — —Total $ — $419,012 $ — $ — Holli Cherevka Salary $ — $100,000 $ — $ —Stock Options (1) — — — —Value of health benefits provided aftertermination (2) — 54,896 — —Total $ — $154,896 $ — $ —53 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(1)Amounts represent the intrinsic value (that is, the value based upon the company’s stock price on December 31, 2018 of$0.39 per share), minus the exercise price of the equity awards that would have become exercisable as of December 31,2018. These stock options had no intrinsic value as of December 31, 2018 due to the stock price being below theexercise price as of this date.(2)The value of such benefits is determined based on the estimated cost of providing health benefits to the NamedExecutive Officer for a period of two years. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The following table sets forth information regarding beneficial ownership of our common stock as of March 1, 2019 by:·each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of ourcommon stock;·each of our named executive officers;·each of our directors; and·all executive officers and directors as a group.We have determined beneficial ownership in accordance with SEC rules. The information does not necessarily indicatebeneficial ownership for any other purpose. Under these rules, the number of shares of common stock deemed outstandingincludes shares issuable upon exercise of options and warrants held by the respective person or group which may beexercised or converted within 60 days after March 1, 2019. For purposes of calculating each person’s or group’s percentage ownership, stock options and warrants exercisable within60 days after March 1, 2019 are included for that person or group but not the stock options or warrants of any other person orgroup. Ownership is based on 111,127,878 shares of common stock outstanding at March 1, 2019.54 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUnless otherwise indicated and subject to any applicable community property laws, to our knowledge, each stockholdernamed in the following table possesses sole voting and investment power over the shares listed. Unless otherwise notedbelow, the address of each stockholder listed on the table is c/o Ampio Pharmaceuticals, Inc., 373 Inverness Parkway,Suite 200, Englewood, Colorado 80112. Number of Shares Beneficially Percentage of Shares Name and Address of Beneficial Owner Owned Beneficially Owned(1) 5% Stockholders CVI Investments Inc. (2) C/O Heights Capital Management, Inc. 101 California Street, Suite 3250 San Francisco, CA 94111 12,104,835 10.3%Bruce Terker (3) 950 W. Valley Road, Suite 2900 Wayne, PA 19087 9,553,331 8.6% Directors and Name Executive Officers Michael Macaluso (4) 2,883,418 2.6%David Bar-Or (5) — —%Richard B. Giles (6) 1,069,549 1.0%Philip H. Coelho (7) 821,482 0.7%Holli Cherevka (8) 590,000 0.5%Thomas Chilcott (9) 416,666 0.4%David R. Stevens (10) 411,990 0.4% Directors and executive officers as a group (seven people) 6,193,105 5.6%(1)Based on shares issued and outstanding as the most recent practicable date, March 1, 2019.(2)Based solely on a Schedule 13G filed on February 12, 2019 by CVI Investments, Inc. reporting beneficial ownership asof December 31, 2018.(3)Based solely on a Schedule 13G filed on January 31, 2019 by Bruce Terker, reporting beneficial ownership as ofDecember 31, 2018.(4)Includes options to purchase 1,096,666 shares that are exercisable within 60 days of March 1, 2019.(5)Dr. Bar-Or stock options expired on December 29, 2018, therefore his beneficial ownership is 0.0% as of March 1, 2019.(6)Includes options to purchase 750,000 shares that are exercisable within 60 days of March 1, 2019.(7)Includes options to purchase 665,554 shares that are exercisable within 60 days of March 1, 2019.(8)Includes options to purchase 590,000 shares that are exercisable within 60 days of March 1, 2019.(9)Includes options to purchase 416,666 shares that are exercisable within 60 days of March 1, 2019.(10)Includes options to purchase 325,000 shares that are exercisable within 60 days of March 1, 2019. Item 13.Certain Relationships, Related Transactions, and Director IndependenceRelated Party TransactionsOther than the director and executive compensation arrangements discussed above in Item 11 “Executive Compensation”,we have not been a party to any transactions since January 1, 2018 in which the amount involved exceeded or will exceed$120,000, and in which any director, executive officer or holder of more than 5% of any class of our voting stock, or anymember of the immediate family of or entities affiliated with any of them, had or will have a material interest.Policies and Procedures for Related Party TransactionsWe have adopted a formal written policy that our executive officers, directors, nominees for election as directors, beneficialowners of more than 5% of any class of our common stock and any member of the immediate family of any of the foregoingpersons, are not permitted to enter into a related party transaction with us without the prior consent of our Audit Committee,subject to the pre-approval exceptions described below. If advance approval is not feasible then the55 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsrelated party transaction will be considered at the Audit Committee’s next regularly scheduled meeting. In approving orrejecting any such proposal, our Audit Committee is to consider the relevant facts and circumstances available and deemedrelevant by our Audit Committee, including, but not limited to, whether the transaction is on terms no less favorable thanterms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the relatedparty’s interest in the transaction. Our Board of Directors has delegated to the chair of our Audit Committee the authority topre-approve or ratify any request for us to enter into a transaction with a related party, in which the amount involved is lessthan $120,000 and where the chair is not the related party. Our Audit Committee will also review certain types of relatedparty transactions that it has deemed pre-approved even if the aggregate amount involved will not exceed $120,000including, employment of executive officers, director compensation, certain transactions with other organizations,transactions where all stockholders receive proportional benefits, transactions involving competitive bids, regulatedtransactions and certain banking-related services.Director IndependenceOur common stock is listed on the NYSE American. The listing rules of the NYSE American require that a majority of themembers of the board of directors be independent. The rules of the NYSE American require that, subject to specifiedexceptions, each member of our Audit, Compensation and Nominating and Governance Committees be independent. AuditCommittee members must also satisfy the independence criteria set forth in Rule 10A‑3 under the Securities Exchange Act of1934. Under the rules of the NYSE American, a director will only qualify as an “independent director” if, in the opinion ofthat company’s board of directors, that person does not have a relationship that would interfere with the exercise ofindependent judgment in carrying out the responsibilities of a director.In order to be considered independent for purposes of Rule 10A‑3, a member of an audit committee of a listed company maynot, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee:(1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of itssubsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.Based upon information provided by each director concerning his or her background, employment and affiliations, includingfamily relationships, our Board of Directors has determined that none of Messrs. Coelho and Giles and Dr. Stevens,representing three of our five directors, has a relationship that would interfere with the exercise of independent judgment incarrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined by theNYSE American. Our Board of Directors also determined that Messrs. Giles, Coelho and Stevens, who comprise our AuditCommittee, our Compensation Committee, our Nominating and Governance Committee, and our Disclosure Committee,satisfy the independence standards for those committees established by applicable SEC rules and the NYSE American rules.In making this determination, our Board of Directors considered the relationships that each non-employee director has withour Company and all other facts and circumstances our Board of Directors deemed relevant in determining theirindependence, including the beneficial ownership of our capital stock by each non-employee director. The Board ofDirectors also has determined that Mr. Giles qualifies as an “audit committee financial expert,” as defined in Item 401(h) ofRegulation S-K promulgated under the Exchange Act. Item 14.Principal Accountant Fees and ServicesPlante Moran, PLLC, or Plante Moran, (formerly known as EKS&H LLLP) has served as our independent auditors sinceJanuary 2010 and has been appointed by the Audit Committee of the Board of Directors to continue as our independentauditors for the fiscal year ended December 31, 2018.The following table presents aggregate fees for professional services rendered by our independent registered publicaccounting firm, Plante Moran for the respective periods. Year Ended December 31, 2018 2017Audit fees (1) $141,000 $153,000Audit-related fees (2) 47,000 34,000Tax fees (3) 16,000 22,000 Total fees $204,000 $209,00056 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(1)Audit fees are comprised of annual audit fees and quarterly review fees.(2)Audit-related fees for fiscal years 2018 and 2017 are comprised of fees related to reviewing the prospectus supplement,proxy statement and registration statements.(3)Tax fees are comprised of tax compliance and preparation.Policy on Audit Committee Pre-Approval of Services of Independent Registered Public Accounting FirmOur Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independentregistered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. Prior toengagement of the independent registered public accounting firm for the following year’s audit, management will submit tothe Audit Committee for approval a description of services expected to be rendered during that year for each of followingfour categories of services:Audit services include audit work performed in the audit of the annual financial statements, review of quarterly financialstatements, reading of annual, quarterly and current reports, as well as work that generally only the independent auditor canreasonably be expected to provide.Audit-related services are for assurance and related services that are traditionally performed by the independent auditor,including the provisions of consents and comfort letters in connection with the filing of registration statements, duediligence related to mergers and acquisitions and special procedures required to meet certain regulatory requirements.Tax services consist principally of assistance with tax compliance and reporting, as well as certain tax planningconsultations.Other services are those associated with services not captured in the other categories. We generally do not request suchservices from our independent auditor.Prior to the engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, andthe Audit Committee requires the independent registered public accounting firm and management to report actual fees versusthe budget periodically throughout the year by category of service. During the year, circumstances may arise when it maybecome necessary to engage the independent registered public accounting firm for additional services not contemplated inthe original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging theindependent registered public accounting firm.The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom suchauthority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at itsnext scheduled meeting. PART IV Item 15.Exhibits and Financial Statement Schedules(a)(1) Financial StatementsThe following documents are filed as part of this Form 10‑K, as set forth on the Index to Financial Statements foundon page F‑1.·Report of Independent Registered Public Accounting Firm·Balance Sheets as of December 31, 2018 and 2017·Statements of Operations for the years ended December 31, 2018 and 2017·Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2018 and 201757 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·Statements of Cash Flows for the years ended December 31, 2018 and 2017·Notes to Financial Statements(a)(2) Financial Statement SchedulesNot Applicable.(a)(3) ExhibitsExhibitnumber Exhibit title2.1 Agreement and Plan of Merger, dated March 2, 2010. (1)2.2 Securities Put and Guarantee Agreement dated March 2, 2010. (1)2.3 Agreement and Plan of Merger, dated September 4, 2010. (2)2.4 Amendment to Agreement and Plan of Merger, effective December 31, 2010. (3)2.5 Amendment to Agreement and Plan of Merger, dated March 22, 2011. (7)3.1 Certificate of Incorporation of the Registrant, as currently in effect. (4)3.2 Certificate of Amendment to Certificate of Incorporation. (4)3.3 Plan of Conversion of Chay Enterprises, Inc. to a Delaware corporation. (4)3.4 Amended and Restated Bylaws of the Registrant, as currently in effect. (33)4.1 Specimen Common Stock Certificate of the Registrant. (6)4.2 Form of Underwriter Warrant. (9)4.3 Form of Warrant to Purchase Common Stock. (23)4.4 Form of Warrant to Purchase Common Stock. (23)4.5 Form of Warrant. (31)10.1 Form of Director and Executive Officer Indemnification Agreement. (5)10.2** 2010 Stock Incentive Plan and forms of option agreements. (5)10.3*** Sponsored Research Agreement dated September 1, 2009. (5)10.4** Employment Agreement, effective January 9, 2012, by and between Ampio Pharmaceuticals, Inc. andMichael Macaluso. (10)10.5** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and David Bar-Or, M.D., datedJuly 15, 2013. (11)10.6 Securities Purchase Agreement by and among Ampio Pharmaceuticals, Inc. and the Purchasers (as definedtherein), dated September 25, 2013. (12)10.7** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and Michael Macaluso, datedOctober 4, 2013. (13)10.8 Lease Agreement by and between Ampio Pharmaceuticals, Inc. and NCWP – Inverness Business Park, LLC,dated December 13, 2013. (35)10.9** Amendment of 2010 Stock and Incentive Plan. (14)10.10*** Human Serum Albumin Ingredient Purchase and Sale Agreement by and between Ampio Pharmaceuticals,Inc. and Supplier, dated October 10, 2013. (15)10.11** Employment Agreement between Ampio Pharmaceuticals, Inc. and Gregory A. Gould, executed June 4, 2014and effective June 10, 2014. (16)10.12** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and David Bar-Or, M.D., datedAugust 11, 2014. (17)10.13** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and Michael Macaluso, datedDecember 20, 2014. (18)10.14** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and David Bar-Or, M.D., datedAugust 3, 2015. (19)10.15 Amendment to Human Serum Albumin Ingredient Purchase and Sale Agreement among AmpioPharmaceuticals, Inc., Octapharma USA, Inc. and Nova Biologics, Inc., effective as of October 8, 2015. (20)10.16 Controlled Equity Offering Sales Agreement, dated February 10, 2016, by and between AmpioPharmaceuticals, Inc. and Cantor Fitzgerald Co. (21)10.17 Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and David Bar-Or, M.D., datedJuly 28, 2016. (22)58 SMSource: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsExhibitnumber Exhibit title10.18 Purchase Agreement between Ampio Pharmaceuticals, Inc. and the investor named therein, dated August 29,2016. (23)10.19** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and Michael Macaluso, datedMarch 9, 2017. (24)10.20 Waiver and Consent Agreement, dated March 27, 2017, by and between Ampio Pharmaceuticals, Inc. andCVI Investments, Inc. (25)10.21 Securities Purchase Agreement, dated June 2, 2017, by and among Ampio Pharmaceuticals, Inc. and theinvestors named therein. (26)10.22 Addendum No. 7, dated June 30, 2017, to the Sponsored Research Agreement, dated September 1, 2009, byand between Ampio Pharmaceuticals, Inc. and Trauma Research LLC. (27)10.23** Amendment to Employment Agreement between Ampio Pharmaceuticals, Inc. and David Bar-Or, M.D., datedJune 30, 2017. (27)10.24** Employment Agreement, dated August 23, 2017, by and between Ampio Pharmaceuticals, Inc. and ThomasE. Chilcott, III. (28)10.25** Employment Agreement, dated September 19, 2017, by and between Ampio Pharmaceuticals, Inc. and HolliCherevka. (29)10.26 Securities Purchase Agreement, dated as of October 15, 2017, by and among Ampio Pharmaceuticals, Inc.and the investors named therein. (30)10.27 Underwriting Agreement, dated August 9, 2018, by and between Ampio Pharmaceuticals, Inc. and CanaccordGenuity LLC. (31)10.28 Amendment No. 1, dated August 10, 2018, to the Underwriting Agreement by and between AmpioPharmaceuticals, Inc. and Canaccord Genuity LLC . (31)10.29 Form of Warrant Exercise Agreement. (34)16.1 Letter Regarding Change in Certifying Accountant, dated March 16, 2010. (5)16.2 Letter from EKS&H LLLP to the SEC dated October 4, 2018. (32)21.1 List of subsidiaries of the Registrant. (8)23.1* Consent of Plante & Moran PLLC.23.2* Consent of EKS&H LLLP.31.1* Certificate of the Chief Executive Officer of Ampio Pharmaceuticals, Inc. pursuant to Section 302 of theSarbanes-Oxley Act of 2002.31.2* Certificate of the Chief Financial Officer of Ampio Pharmaceuticals, Inc. pursuant to Section 302 of theSarbanes-Oxley Act of 2002.32.1* Certificate of the Chief Executive Officer and the Chief Financial Officer of Ampio Pharmaceuticals, Inc.pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101 XBRL (extensible Business Reporting Language). The following materials from Ampio Pharmaceuticals,Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in XBRL: (i) theBalance Sheets, (ii) the Statements of Operations, (iii) the Statements of Stockholders’ Equity (Deficit), (iv)the Statements of Cash Flows, and (v) the Notes to the Financial Statements. (1)Incorporated by reference from Registrant’s Form 8-K filed March 8, 2010.(2)Incorporated by reference from Registrant’s Amendment No. 1 to Form 8-K filed January 7, 2011.(3)Incorporated by reference from Registrant’s Amendment No. 2 to Form 8-K filed January 7, 2011.(4)Incorporated by reference from Registrant’s Form 8-K filed March 30, 2010.(5)Incorporated by reference from Registrant’s Form 8-K/A filed March 17, 2010.(6)Incorporated by reference from Registrant’s Registration Statement on Form S-4 filed January 7, 2011.(7)Incorporated by reference from Registrant’s Form 8-K filed March 25, 2011.(8)Incorporated by reference from Registrant’s Registration Statement on Form S-1 filed November 12, 2010.(9)Incorporated by reference from Registrant’s Form 8-K filed July 13, 2012.(10)Incorporated by reference from Registrant’s Form 8-K filed September 13, 2012.(11)Incorporated by reference from Registrant’s Form 8-K filed July 19, 2013.(12)Incorporated by reference from Registrant’s Form 8-K filed September 26, 2013.(13)Incorporated by reference from Registrant’s Form 8-K filed October 4, 2013.(14)Incorporated by reference from Registrant’s Proxy Statement on Form 14A filed November 1, 2013.(15)Incorporated by reference from Registrant’s Form 10-K/A filed May 23, 2014.59 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(16)Incorporated by reference from Registrant’s Form 8-K filed June 10, 2014.(17)Incorporated by reference from Registrant’s Form 8-K filed August 15, 2014.(18)Incorporated by reference from Registrant’s Form 8-K filed December 29, 2014.(19)Incorporated by reference from Registrant’s Form 8-K filed August 6, 2015.(20)Incorporated by reference from Registrant’s Form 8-K filed October 20, 2015.(21)Incorporated by reference from Registrant’s Form 8-K filed on February 10, 2016.(22)Incorporated by reference from Registrant’s Form 10-Q filed August 2, 2016.(23)Incorporated by reference from Registrant’s Form 8-K filed on August 29, 2016.(24)Incorporated by reference from Registrant’s Form 8-K filed on March 13, 2017.(25)Incorporated by reference from Registrant’s Form 8-K filed on March 28, 2017.(26)Incorporated by reference from Registrant’s Form 8-K filed on June 6, 2017.(27)Incorporated by reference from Registrant’s Form 8-K filed on July 7, 2017.(28)Incorporated by reference from Registrant’s Form 8-K filed on August 29, 2017.(29)Incorporated by reference from Registrant’s Form 8-K filed on September 22, 2017.(30)Incorporated by reference from Registrant’s Form 8-K filed on October 16, 2017.(31)Incorporated by reference from Registrant’s Form 8-K filed on August 13, 2018.(32)Incorporated by reference from Registrant’s Form 8-K filed October 4, 2013.(33)Incorporated by reference from Registrant’s Form 10-Q filed November 14, 2018.(34)Incorporated by reference from Registrant’s Form 8-K filed on December 10, 2018.(35)Incorporated by reference from Registrant’s Form 8-K filed December 19, 2013.*Filed herewith.**This exhibit is a management contract or compensatory plan or arrangement.***Confidential treatment has been applied for with respect to certain portions of these exhibits. Item 16.None60 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMPIO PHARMACEUTICALS, INC. Date: March 18, 2019By:/s/ Michael Macaluso Michael Macaluso Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the Registrant in the capacities indicated, on March 18, 2019.Signature Title /s/ Michael Macaluso Chairman of the Board and Chief Executive OfficerMichael Macaluso /s/ Thomas E. Chilcott Chief Financial Officer (Principal Financial andThomas E. Chilcott Accounting Officer), Secretary and Treasurer /s/ David Bar-Or DirectorDavid Bar-Or /s/ Philip H. Coelho DirectorPhilip H. Coelho /s/ Richard B. Giles DirectorRichard B. Giles /s/ David R. Stevens DirectorDavid R. Stevens 61 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents INDEX TO FINANCIAL STATEMENTSAMPIO PHARMACEUTICALS, INC. Page Report of Independent Registered Public Accounting Firm F-2 Balance Sheets F-5 Statements of Operations F-6 Statements of Stockholders’ Equity F-7 Statements of Cash Flows F-8 Notes to Financial Statements F-9 F-1 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsReport of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Ampio Pharmaceuticals Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying balance sheet of Ampio Pharmaceuticals (the “Company”) as of December 31, 2018, therelated statement of operations, stockholders' equity, and cash flows for year ended December 31, 2018, and the related notes(collectively referred to as the “financial statements”). We also have audited the Company's internal control over financialreporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 31, 2018, and the results of its operations and its cash flows for the year ended December 31, 2018,in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, theCompany maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,based on criteria established in the COSO framework. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a netcapital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regardto these matters are also described in Note 3. The financial statements do not include any adjustments that might result fromthe outcome of this uncertainty. Basis for Opinion The Company's management is responsible for these financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in theaccompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to expressan opinion on the Company’s financial statements and an opinion on the Company's internal control over financial reportingbased on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether dueto error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included performing procedures to assess the risks of material misstatement of thefinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such proceduresincluded examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditalso included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit alsoincluded performing such other procedures as we considered necessary in the circumstances. We believe that our auditprovide a reasonable basis for our opinions. F-2 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDefinition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Plante & Moran, PLLCWe have served as the Company’s auditor since 2010. Denver, ColoradoMarch 18, 2019 F-3 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Report of Independent Public Accounting Firm To the Shareholders and Board of Directors ofAmpio Pharmaceuticals, Inc.Englewood, Colorado OPINIONS ON THE CONSOLIDATED FINANCIAL STATEMENTS We have audited the accompanying balance sheet of Ampio Pharmaceuticals (the “Company”) as of December 31, 2017, andthe related statement of operations, stockholders’ equity, and cash flows, for the year ended December 31, 2017, and therelated notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 31, 2017, and the results of its operations and its cash flows for the year ended December 31, 2017,in conformity with accounting principles generally accepted in the United States of America. GOING CONCERN UNCERTAINTY The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a netcapital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regardto these matters are also described in Note 3. The financial statements do not include any adjustments that might result fromthe outcome of this uncertainty. BASIS FOR OPINIONS We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whetherdue to error or fraud. /s/ EKS&H LLLP March 6, 2018Denver, Colorado F-4 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC.Balance Sheets December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $7,585,392 $8,209,071Prepaid expenses and other 413,280 233,815Total current assets 7,998,672 8,442,886 Fixed assets, net (Note 2) 5,997,582 6,837,861Deposits 33,856 33,856Total assets $14,030,110 $15,314,603 Liabilities and Stockholders’ Equity Current liabilities Accounts payable and accrued expenses $1,324,651 $2,785,529Accrued compensation — 1,033,261Deferred rent - current portion 59,579 59,579Total current liabilities 1,384,230 3,878,369 Long-term deferred rent 476,753 537,364Warrant derivative liability 6,933,031 45,075,755Total liabilities 8,794,014 49,491,488 Commitments and contingencies (Note 6) Stockholders’ equity Preferred Stock, par value $0.0001; 10,000,000 shares authorized; none issued — —Common Stock, par value $0.0001; 200,000,000 shares authorized; shares issued andoutstanding - 110,941,516 in 2018 and 80,060,345 in 2017 11,094 8,006Additional paid-in capital 176,227,510 170,803,783Accumulated deficit (171,002,508) (204,988,674)Total stockholders’ equity 5,236,096 (34,176,885) Total liabilities and stockholders’ equity $14,030,110 $15,314,603 The accompanying notes are an integral part of these financial statements.F-5 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC.Statements of Operations Years Ended December 31, 2018 2017 Operating expenses Research and development $6,828,612 $10,097,178Research and development - related party (Note 9) — 323,554General and administrative 4,355,350 5,255,467Total operating expenses 11,183,962 15,676,199 Other income (expense) Interest (expense) income (5,012) 3,086Derivative gain (loss) 45,298,316 (36,218,832)Loss from disposal of fixed assets (123,176) —Total other income (expense) 45,170,128 (36,215,746) Net income (loss) $33,986,166 $(51,891,945) Basic and diluted net income (loss) per common share $0.46 $(0.79) Weighted average number of common shares outstanding 73,358,034 65,297,348 The accompanying notes are an integral part of these financial statements.F-6 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC.Statements of Stockholders’ Equity Additional Total Common Stock Paid-in Advance to Accumulated Stockholders' Shares Amount Capital Stockholder Deficit Equity Balance at December 31, 2016 57,179,686 $5,718 $159,732,194 $(25,160) $(153,078,441) $6,634,311 Common stock issued for services 62,478 6 59,994 — — 60,000Common stock issued, net of offering costs of $1,721,173 18,699,645 1,870 6,998,512 — 7,000,382Warrants issued in connection with the registered direct offering to theplacement agent — — 369,465 — 369,465Cumulative effect of ASU 2016-09, net — — 18,288 (18,288) —Options exercised, net 66,667 7 33,994 — — 34,001Warrants exercised, net 4,051,869 405 2,771,939 — — 2,772,344Warrant modification — — 74,527 74,527Stock-based compensation, net — — 744,870 — — 744,870Write-off of advance to stockholder — — — 25,160 — 25,160Net loss — — — — (51,891,945) (51,891,945)Balance at December 31, 2017 80,060,345 8,006 170,803,783 — (204,988,674) (34,176,885) Common stock issued for services 17,241 2 59,998 — — 60,000Common stock issued in connection with the confidentially marketedpublic offering, net of offering costs of $844,409 20,000,000 2,000 (2,000) —Options exercised, net 348,783 35 636,375 — — 636,410Warrants exercised, net 10,515,147 1,051 4,285,568 — — 4,286,619Stock-based compensation, net — — 443,786 — — 443,786Net income — — — — 33,986,166 33,986,166 Balance at December 31, 2018 110,941,516 $11,094 $176,227,510 $ — $(171,002,508) $5,236,096 The accompanying notes are an integral part of these financial statements.F-7 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC.Statements of Cash Flows Years Ended December 31, 2018 2017 Cash flows from operating activities Net income (loss) $33,986,166 $(51,891,945)Adjustments to reconcile net income (loss) to net cash used in operating activities Stock-based compensation 443,786 744,870Warrant modification expense — 74,527Depreciation and amortization 1,281,379 1,214,474Loss from disposal of fixed assets 123,176 —Write-off of advance to stockholder — 25,160Amortization of prepaid research and development - related party (Note 9) — 323,555Common stock issued for services 60,000 60,000Derivative (gain) loss (45,298,316) 36,218,832Changes in operating assets and liabilities (Increase) decrease in prepaid expenses and other (179,465) 129,716(Decrease) increase in accounts payable and accrued expenses (1,460,877) 2,076,235Decrease in deferred rent (60,611) (50,939)Decrease in accrued compensation (1,033,261) (332,432)Net cash used in operating activities (12,138,023) (11,407,947) Cash flows used in investing activities Purchase of fixed assets (564,276) (72,325)Net cash used in investing activities (564,276) (72,325) Cash flows from financing activities Proceeds from sale of common stock related to the confidentially marketed public offering 8,000,000 —Costs related to sale of common stock related to the confidentially marketed public offering (844,409) —Proceeds from sale of common stock related to the registered direct offering — 13,339,873Costs related to sale of common stock related to the registered direct offering — (1,351,708)Proceeds from option and warrant exercise 4,923,029 2,806,344Net cash provided by financing activities 12,078,620 14,794,509 Net change in cash and cash equivalents (623,679) 3,314,237 Cash and cash equivalents at beginning of period 8,209,071 4,894,834Cash and cash equivalents at end of period $7,585,392 $8,209,071 Non-cash transactions: Warrant derivative liability in connection with the confidentially marketed public offering $8,008,500 $ —Warrant derivative liability in connection with the registered direct offering — 4,618,318Warrants issued to placement agent in connection with the registered direct offering — 369,465Placement agent warrant exercises, net — 17 The accompanying notes are an integral part of these financial statements.F-8 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAMPIO PHARMACEUTICALS, INC.Notes to Financial StatementsNote 1 – Basis of PresentationThe accompanying financial statements have been prepared in conformity with U.S. Generally Accepted AccountingPrinciples (“GAAP”). Ampio Pharmaceuticals, Inc. (“Ampio” or “the Company”) is a biopharmaceutical company focusedprimarily on developing Ampion, which is a compound that decrease inflammation by inhibiting specific pro-inflammatorycompounds.The Company’s activities have been primarily related to research and development and raising capital. The Company has notgenerated revenue to date. Note 2 – Summary of Significant Accounting PoliciesCash and Cash EquivalentsThe Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cashequivalents. The Company’s investment policy is to preserve principal and maintain liquidity. The Company periodicallymonitors its positions with, and the credit quality of, the financial institutions with which it invests. During the year ended asof December 31, 2018, Ampio has maintained balances in excess of federally insured limits.Fixed AssetsFixed assets are recorded at cost and once placed in service are depreciated using the straight-line method over theirestimated useful lives. Leasehold improvements are amortized over the shorter of the estimated economic life or related leaseterms. Fixed assets consist of the following: Estimated December 31, Useful Lives in Years 2018 2017 Manufacturing facility/clean room 3 - 8 $3,076,000 $2,773,000Leasehold improvements 10 6,075,000 6,075,000Office furniture and equipment 5 - 10 511,000 557,000Lab equipment 5 - 8 1,128,000 1,059,000Less accumulated depreciation and amortization (4,793,000) (3,626,000) Fixed assets, net $5,997,000 $6,838,000 The Company recorded depreciation and amortization expense in the respective periods as follows: Years Ended December 31, 2018 2017 Depreciation and Amortization Expense $1,281,000 $1,214,000 Accrued CompensationAccrued compensation consisted of earned paid time off (PTO) and the employee bonus accrual. As of October 1, 2018, theCompensation Committee amended the PTO policy to eliminate the year end carryover. In addition, on October 1,F-9 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents2018, the Compensation Committee also approved a one-time option repricing where the exercise price of certain employeeoptions was reduced to an exercise price of $0.75. The amended stock options provide an additional incentive to retain andmotivate key contributors of the Company. In conjunction with the repricing, the Compensation Committee eliminated alloutstanding accrued bonuses, which amounted to approximately $813,000. Therefore, the accrued compensation balance is$0 for the year ended December 31, 2018. See Note 8 for additional information on the option repricing. Use of EstimatesThe preparation of financial statements in accordance with GAAP, requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts ofexpenses during the reporting periods. Significant items subject to such estimates and assumptions include the fair value ofthe warrant derivative liability, stock-based compensation, the useful lives of fixed assets, impairment of fixed assets,valuation allowance and the going concern. Actual results could differ from these estimates.DerivativesIn connection with the August 2018 confidentially marketed public offering, the Company issued to investors warrants topurchase an aggregate of 20.0 million shares of common stock at an exercise price of $0.40 with a term of five years. Due tocertain derivative features, these investor warrants are accounted for under liability accounting and are recorded at fair valueeach reporting period. See Notes 4 and 8 for additional information on derivatives.In connection with the June 2017 registered direct offering, the Company issued to investors warrants to purchase anaggregate of approximately 11.0 million shares of common stock at an exercise price of $0.76 with a term of five years. Dueto certain derivative features, these investor warrants are accounted for under liability accounting and are recorded at fairvalue each reporting period. See Notes 4 and 8 for additional information on derivatives.Income TaxesDeferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences betweenthe financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating lossand tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in theperiod that includes the enactment date. The overall change in deferred tax assets and liabilities for the period measures thedeferred tax expense or benefit for the period. The measurement of deferred tax assets may be reduced by a valuationallowance based on judgmental assessment of available evidence if deemed more likely than not that some or all of thedeferred tax assets will not be realized. The Company has recorded a valuation allowance against all of its deferred tax assets,as management has concluded that it is more likely than not that the net deferred tax asset will not be realized through futuretaxable income, based primarily on the Company’s history of operating losses.Net Income or Loss per Common ShareBasic net income or loss per share is computed by dividing the net income or loss available to common stockholders by theweighted-average number of shares outstanding during the period. Diluted income or loss per share is computed by dividingnet income or loss by the weighted average number of common shares outstanding during the period increased to include, ifdilutive, the number of additional common shares that would have been outstanding if the potential common shares hadbeen issued. The Company’s potential dilutive shares include stock options and warrants for shares of common stock. TheCompany recognized net income as of December 31, 2018, or the 2018 period, which is primarily attributable to the non-cash derivative gain. The non-cash derivative gain is considered an unusual item and as a result, diluted income or loss pershare is computed in the same manner as the basic net income or loss per share. If the Company did not have the non-cashderivative gain, a net loss would have been recognized. Therefore, all potentially dilutive shares of common stock have beenexcluded from the computation of the dilutive net loss per share for the 2018 period, as they would have been anti-dilutive.The Company recognized a net loss as of December 31, 2017, therefore allF-10 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentspotentially dilutive shares of common stock have been excluded from the computation of the dilutive net loss per share asthey would have been anti-dilutive. The potential dilutive shares of common stock consist of the following: Years Ended December 31, 2018 2017Potentially dilutive securities, excluded: Outstanding stock options 5,426,165 7,247,165Warrants to purchase shares of common stock 22,283,191 13,332,243 27,709,356 20,579,408 Stock-Based CompensationThe Company accounts for share based payments by recognizing compensation expense based upon the estimated fair valueof the awards on the date of grant. The Company determines the estimated grant fair value using the Black-Scholes optionpricing model and recognizes compensation costs ratably over the requisite service period which approximates the vestingperiod using the graded method.Research and DevelopmentResearch and development costs are expensed as incurred in the respective periods.Fair Value of Financial InstrumentsThe Company’s financial instruments include cash and cash equivalents, accounts payable and accrued expenses, andwarrant derivative liability. The carrying amounts of cash and cash equivalents and accounts payable and accrued expensesare carried at cost which approximates fair value due to the short maturity of these instruments. Warrants are recorded atestimated fair value based on a Black-Scholes warrant pricing model. The valuation policies are determined by the ChiefFinancial Officer and approved by the Company’s Board of Directors. See Note 4 for additional information on the fairvalue of financial instruments.Impairment of Long-Lived AssetsThe Company performs an annual evaluation of the recoverability of the carrying value of its long-lived assets to determineif facts and circumstances indicate that the carrying value of assets may be impaired and if any adjustment iswarranted. Based on the Company’s evaluation as of December 31, 2018 and 2017, no impairment existed for long-livedassets.Adoption of Recent Accounting PronouncementsIn March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09,“Compensation -Stock Compensation (Topic 718): Improvements to Employee Share Based Payment Accounting”. Thestandard includes multiple provisions intended to simplify various aspects of the accounting for share based payments. Theamendments are expected to significantly impact net income, earnings per share, and the statement of cash flows.Implementation and administration may present challenges to companies with significant share based payment activities.These amendments were effective for public entities for fiscal years, and interim periods within those fiscal years, beginningafter December 15, 2016. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of thebeginning of the fiscal year of adoption. The Company adopted ASU 2016-09 in the first quarter of 2017. The Companyelected to recognize forfeitures as they occur rather than estimating the forfeiture rate on the option grant date. Thecumulative-effect of the change was $18,000 which was charged to retained earnings during the first quarter of 2017. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of ModificationAccounting”. The amendments provide guidance on determining which changes to the terms and conditions of share-F-11 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsbased payment awards require an entity to apply modification accounting under Topic 718. Under the new guidance,modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes asa result of the change in terms or conditions. For all entities, this standard is effective for financial statements issued for fiscalyears beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2017-09during the first quarter of 2018 and the adoption of this guidance did not have a material impact on the Company’s financialstatements. Recent Accounting PronouncementsIn February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. The new standard establishes a right-of-use (ROU)model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longerthan 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expenserecognition in the income statement. Lessees are required to use a modified retrospective transition approach for capital andoperating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financialstatements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-10, “CodificationImprovements to Topic 842, Leases,” to clarify how to apply certain aspects of the new lease standard. In July 2018, theFASB also issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” to give entities another option for transition.The additional option for transition allows an entity to apply the new lease standard at the adoption date and recognize acumulative-effect adjustment to the opening balance of retained earnings in the period of adoption or apply a practicalexpedient. The new standards are effective for fiscal years beginning after December 15, 2018, including interim periodswithin those fiscal years. The Company expects that this standard will have a material effect on the financial statements. While the Companycontinues to assess all of the effects of the adoption, it currently believes that the most significant effects relate to (1) therecognition of a new ROU asset and lease liability on its balance sheet for the office operating lease; (2) the derecognition ofthe existing deferred rent balances; and (3) providing new disclosure regarding its leasing activities. The Company does notexpect significant change in its leasing activities between now and adoption. On adoption, the Company currently expects torecognize an additional operating lease liability of approximately $1.7 million, which represents the present value of theremaining minimum lease payments. The Company will also derecognize the deferred rent balance, which includes deferredtenant improvements, of approximately $540,000 and recognized an ROU asset of $1.2 million. In June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements toNonemployee Share-Based Payment Accounting”. The amendment expands the scope of Topic 718 to include share-basedpayment transactions for acquiring goods and services from nonemployees. Companies should apply the requirements ofTopic 718 to nonemployee awards except for certain exemptions specified in the amendment. The guidance is effective forfiscal years beginning after December 15, 2018, including interim reporting periods within those fiscal years. Early adoptionis permitted, but no earlier than the Company’s adoption date of ASU 2014-09 “Revenue from Contracts with Customers(Topic 606)”. The Company does not expect the adoption of this ASU will have a significant impact on its financialstatements. In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which facilitates amendments to a variety oftopics to clarify, correct errors in, or make minor improvements to the accounting standards codification. The effective dateof the standard is dependent on the facts and circumstances of each amendment. Some amendments do not require transitionguidance and will be effective upon the issuance of this standard. A majority of the amendments in ASU 2018-09 will beeffective for fiscal years beginning after December 15, 2018. The Company does not expect the adoption of this ASU willhave a significant impact on its financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820)”. Theupdated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective forfiscal years beginning after December 15, 2019, including interim reporting periods within those fiscal years. Early adoptionis permitted for any removed or modified disclosures. The Company does not expect the adoption of this ASU will have asignificant impact on its financial statements.F-12 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to itsfinancial condition, results of operations, cash flows or disclosures. Note 3 – Going ConcernAs reflected in the accompanying financial statements, the Company had cash of $7.6 million with net income of $34.0million for the year ended December 31, 2018. The net income is primarily attributable to the non-cash derivative gain of$45.3 million that was recognized, which was offset by the operating expenses of $11.2 million during the year endedDecember 31, 2018. The Company used net cash in operations of $12.1 million for the year ended December 31, 2018. TheCompany ended the year with an accumulated deficit of $171.0 million and stockholders’ equity of $5.2 million. In addition,the Company is a clinical stage biopharmaceutical company and has not generated any revenues or profits to date. Thesefactors raise substantial doubt about the Company’s ability to continue as a going concern.For the year ended December 31, 2018, the Company received a total of $4.9 million from investor warrants and stockoptions being exercised. See additional information in Note 8 regarding warrant and stock option exercises. In addition,the Company raised gross proceeds of $8.0 million in a confidentially marketed public offering. See additional informationin Note 7 regarding the confidentially marketed public offering. The Company expects that current cash resources andoperating cash flows will be sufficient to sustain operations into the second quarter of 2019. The ability of the Company tocontinue its operations is dependent on management’s plans, which includes continuing to raise equity-based and debtfinancing, as well as encouraging additional warrant exercises. However, there is no assurance that the Company will besuccessful in raising sufficient capital.The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization ofassets and the satisfaction of liabilities in the normal course of business. These financial statements do not include anyadjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessaryshould the Company be unable to continue as a going concern.Note 4 – Fair Value ConsiderationsAuthoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (anexit price) in an orderly transaction between market participants at the measurement date. The guidance establishes ahierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use ofunobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs thatmarket participants would use in pricing the asset or liability developed based on market data obtained from sourcesindependent of Ampio. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participantswould use in pricing the asset or liability developed based on the best information available in the circumstances. Thehierarchy is broken down into three levels based on reliability of the inputs as follows:Level 1:Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assetsor liabilities;Level 2:Inputs include quoted prices for similar assets and liabilities in active or inactive markets or that are observable forthe asset or liability either directly or indirectly; andLevel 3:Unobservable inputs that are supported by little or no market activity.The Company’s assets and liabilities which are measured at fair value are classified in their entirety based on the lowest levelof input that is significant to their fair value measurement. The Company’s policy is to recognize transfers in and/or out offair value hierarchy as of the date in which the event or change in circumstances caused the transfer. The Company hasconsistently applied the valuation techniques discussed below in all periods presented.F-13 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table presents Ampio’s financial assets and liabilities that were accounted for at fair value on a recurring basisas of December 31, 2018 and 2017, by level within the fair value hierarchy: Fair Value Measurements Using Level 1 Level 2 Level 3 TotalDecember 31, 2018 LIABILITIES Warrant derivative liability $ — $ — $6,933,000 $6,933,000 December 31, 2017 LIABILITIES Warrant derivative liability $ — $ — $45,076,000 $45,076,000 The warrant derivative liability was valued using the Black-Scholes valuation methodology because that model embodies allthe relevant assumptions that address the features underlying these instruments. The significant assumptions in valuing thewarrant derivative liability as of December 31, 2018, December 31, 2017 and at issuance are disclosed in Note 8.The following table sets forth a reconciliation of changes in the fair value of financial liabilities classified as Level 3 in thefair valued hierarchy: Derivative Instruments Balance as of December 31, 2017 $45,076,000Warrant issuances 8,008,000Warrant exercises (13,281,000)Modified warrant exercises (1,972,000)Change in fair value (30,898,000)Balance as of December 31, 2018 $6,933,000 Note 5 – Income TaxesIncome tax benefit resulting from applying statutory rates in jurisdictions in which Ampio is taxed (Federal and State ofColorado) differs from the income tax provision (benefit) in Ampio’s financial statements. The following table reflects thereconciliation for the respective periods: Years Ended December 31, 2018 2017 Expense (benefit) at federal statutory rate 21.0% (34.0)% State, net of federal income tax impact (0.8)% (0.9)% Change in federal tax rate 0.0% 35.8% Stock-based compensation 2.3% 0.0% Registered offering loss / warrant expense (28.1)% 23.7% Aytu change from subsidiary to investee 0.0% 0.0% Change in valuation allowance 5.6% (24.6)% Effective tax rate 0.0% 0.0% F-14 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDeferred income taxes arise from temporary differences in the recognition of certain items for income tax and financialreporting purposes. The approximate tax effects of significant temporary differences which comprise the deferred tax assetsand liabilities are as follows for the respective periods: Years Ended December 31, 2018 2017Long-term deferred income tax assets (liabilities): Accrued liabilities $ — $247,000Interest expense carryforward 1,000 —Deferred rent 132,000 147,000Net operating loss carryforward 35,868,000 32,766,000Share-based compensation 2,255,000 3,192,000Unrealized loss on trading security 774,000 771,000Property and equipment (210,000) (236,000)Warrants 67,000 82,000Less: Valuation allowance (38,887,000) (36,969,000)Total long-term deferred income tax assets (liabilities) $ — $ — As of December 31, 2018, Ampio has approximately $145.4 million in net operating loss (“NOL”) carryforwards that, subjectto limitation, may be available in future tax years to offset taxable income. The majority of these net operating losscarryforwards expire from 2019 through 2037. Approximately $12.6 million of the NOL carryforward carries forwardindefinitely. Under the provisions of the Internal Revenue Code, substantial changes in the Company’s ownership may resultin limitations on the amount of NOL carryforwards that can be utilized in future years.Ampio has provided a full valuation allowance against its deferred tax assets as it has determined that it is not more likelythan not that recognition of such deferred tax assets will be utilized in the foreseeable future. The amount of income taxesand related income tax positions taken are subject to audits by federal and state tax authorities. Ampio has adoptedaccounting guidance for uncertain tax positions which provides that in order to recognize an uncertain tax benefit, thetaxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as thelargest amount that is more than 50% likely to be realized upon recognition of the benefit. Ampio believes that it has nomaterial uncertain tax positions and has fully reserved against Ampio’s future tax benefit with a valuation allowance anddoes not expect significant changes in the amount of unrecognized tax benefits to occur within the next twelve months.Ampio’s policy is to record a liability for the difference between benefits that are both recognized and measured pursuant toGAAP and tax positions taken or expected to be taken on the tax return. Then, to the extent that the assessment of such taxpositions changes, the change in estimate is recorded in the period in which the determination is made. Ampio reports tax-related interest and penalties as a component of income tax expense. During the periods reported, management of Ampio hasconcluded that no significant tax position requires recognition. Ampio files income tax returns in the United States federaland various state jurisdictions. The Company is no longer subject to income tax examinations for federal income taxes before2015 or for Colorado before 2014. Net operating loss carryforwards are subject to examination in the year they are utilizedregardless of whether the tax year in which they are generated has been closed by statute. The amount subject todisallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOL’sgenerated as such NOL’s are utilized.In December 2017, the Tax Cuts and Jobs Act (the "2017 Tax Act") was enacted. The 2017 Tax Act significantly revised theU.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effectiveJanuary 1, 2018. In accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for theapplication of ASC Topic 740, the Company recognized the income tax effects of the 2017 Tax Act in its financialstatements in the year the 2017 Tax Act was signed into law. As such, the Company’s 2017 financial statements reflect theincome tax effects of the 2017 Tax Act for which the accounting is complete and provisional amounts for those specificincome tax effects for which the accounting is incomplete but a reasonable estimate could be determined. The Company didnot identify items for which the income tax effects of the 2017 Tax Act have not been completed and a reasonable estimatecould not be determined as of December 31, 2017.F-15 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs a result of the 2017 Tax Act, the Company recorded a provisional tax expense of $18.6 million for the year endedDecember 31, 2017 related to the remeasurement of deferred tax assets and liabilities to reflect the reduction in the U.S.corporate income tax rate from 35% to 21%. The Company recognized a corresponding $18.6 million decrease in netdeferred tax assets as of December 31, 2017. The $18.6 million tax expense recognized was fully offset by a reduction invaluation allowance, resulting in zero net tax expense for the year ended December 31, 2017 related to the reduction in taxrates and zero net decrease in the net deferred tax assets as of December 31, 2017.Note 6 – Commitments and ContingenciesThe following table summarizes the commitments and contingencies as of December 31, 2018 which are described below: Total 2019 2020 2021 2022 2023 Thereafter Clinical research and trialobligations 50,000 50,000 — — — — —Biologics LicenseApplication (BLA)consulting services 1,161,000 1,161,000 — — — — —Facility lease 2,005,000 326,000 335,000 345,000 355,000 364,000 280,000 $3,216,000 $1,537,000 $335,000 $345,000 $355,000 $364,000 $280,000 Clinical Research and Trial ObligationsIn November 2017, Ampio entered into an Open Label Extension (OLE) study agreement. In August 2018, the Companyterminated the OLE study. The Company will continue to incur close-out costs for the study through the beginning of fiscal2019. As of December 31, 2018, there is an outstanding commitment of $50,000.Biologics License Application (BLA) Consulting Services In March 2018, Ampio entered into a BLA consulting services agreement, which has an outstanding commitment of $1.2million. This contract is an open-ended contract and the Company incurs costs as sections of the BLA are completed. TheCompany has incurred $51,000 against the contract as of December 31, 2018. Facility LeaseIn December 2013, Ampio began a 125‑month non-cancellable operating lease for office space and the manufacturingfacility effective May 1, 2014. The lease had initial base rent of $23,000 per month, with the total base rent over the term ofthe lease of approximately $3.3 million, which includes rent abatements and leasehold incentives. The Company recognizesrent expense on a straight-line basis over the term of the lease. The Company recognizes deferred rent when the straight-linerent expense exceeds the actual lease payments and reduces deferred rent when the actual lease payments exceed the straight-line rent expense. Deferred rent is classified between current and long-term on the balance sheet.The Company recorded rent expense in the respective periods is as follows: Years Ended December 31, 2018 2017 Rent expense $260,000 $260,000 F-16 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNote 7 – Common StockCapital StockAt December 31, 2018 and 2017, Ampio had 200.0 million shares of common stock authorized with a par value of $0.0001per share, and 10.0 million shares of preferred stock authorized with a par value of $0.0001 per share.At December 31, 2018 and 2017, Ampio had 110,941,516 and 80,060,345 common shares outstanding, respectively. As ofthese same dates, Ampio had no preferred shares outstanding.Shelf RegistrationIn March 2017, Ampio filed a shelf registration statement on Form S‑3 with the Securities and Exchange Commission(“SEC”) to register Ampio common stock and warrants in an aggregate amount of up to $100.0 million for offerings fromtime to time, as well as 5.0 million shares of common stock available for sale by selling shareholders. The shelf registrationwas declared effective in April 2017 by the SEC. As a result of equity raises, approximately $78.7 million remained availableunder the Form S‑3 as of December 31, 2018. This shelf registration statement on Form S‑3 expires in March of 2020.Confidentially Marketed Public Offering In August 2018, the Company completed a confidentially marketed public offering. In this offering, the Company issued20.0 million shares of its common stock and warrants to purchase up to 20.0 million shares of common stock. The commonstock and warrants were sold in units, with each unit consisting of one share of common stock and a warrant to purchase oneshare of common stock. Each unit was sold to the investors in this offering at a negotiated price of $0.40 per unit generatinggross proceeds of $8.0 million. In connection with the offering, the underwriter received a 7% commission totaling $560,000.The Company also incurred expenses related to legal, accounting, and other registration costs of $284,000. The shares andthe warrants were offered and sold pursuant to the Company’s shelf registration statement on Form S-3, which was declaredeffective by the SEC in April 2017. The warrants have an exercise price of $0.40 per share and are exercisable immediately with a term of five years fromissuance. The warrants include a provision where the warrant holder has the contractual right to request a cash exercise if theeffectiveness of the registration statement is not maintained, but securities law would prevent the Company from issuingregistered shares in a cash exercise. Therefore, the Company could be forced to cash settle the warrants. Based on thisderivative feature, these warrants must be accounted for as a liability at fair value under Accounting Standards Codification(“ASC”) 815 “Derivatives and Hedging”. On the date of issuance, these warrants were valued at $8.0 million. The Company’s net cash proceeds from the confidentially marketed public offering totaled $7.2 million. When theadditional non-cash charges of $8.0 million related to the 20.0 million warrants are offset against the net cash transactionproceeds, the non-cash charges exceeded 100% of the proceeds. Therefore, the Company is required to take the additionalcost above the transaction proceeds and recognize a loss on the day it entered into the transaction. The loss on thetransaction was $853,000 and this amount is included in the derivative gain on the statement of operations.Registered Direct OfferingsIn October 2017, the Company entered into a Securities Purchase Agreement, with certain investors, pursuant to which theCompany sold approximately 7.7 million shares of common stock at a price per share of $0.875. The gross proceeds from theoffering were approximately $6.7 million. The costs associated with the offering were approximately $490,000. The shareswere offered and sold pursuant to the Company’s shelf registration statement on Form S-3, which was declared effective bythe SEC in April 2017. In June 2017, the Company completed a registered direct offering. In this offering, Ampio issued directly to multipleinvestors approximately 11.0 million shares of its common stock and approximately 11.0 million warrants to purchaseF-17 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsshares of common stock. The common stock and warrants were sold in units, with each unit consisting of one share ofcommon stock and a warrant to purchase one share of common stock. Each unit was sold to the investors in this offering at anegotiated price of $0.60 per unit generating gross proceeds of $6.6 million. In connection with the offering, the placementagent received an 8% commission totaling $533,000 and approximately 879,000 warrants with an exercise price of $0.76.The expiration date of these warrants is June 1, 2022. At issuance, these warrants had a value of $369,000 and wereaccounted for as equity-based warrants. The placement agent warrants provide for cashless exercise, which the placementagents may elect if there is no effective registration statement. The Company also incurred expenses related to legal,accounting, and other registration costs of $292,000. The investor warrants have an exercise price of $0.76 per share and were exercisable starting on December 7, 2017 with aterm of five years from issuance. The investor warrants include a provision where the warrant holder has the contractual rightto request a cash exercise if the effectiveness of the registration statement is not maintained, but securities law would preventthe Company from issuing registered shares in a cash exercise. Therefore, the Company could be forced to cash settle thewarrant. Based on this derivative feature, these warrants must be accounted for as a liability at fair value under ASC 815“Derivatives and Hedging”. On the date of issuance, these warrants were valued at $4.6 million. The shares and the warrantswere offered and sold pursuant to the Company’s shelf registration statement on Form S-3, which was declared effective bythe SEC in April 2017. The June 2017 registered direct offering included participation rights of 35% for any proposed or intended issuance or sale orexchange of securities being offered until the second anniversary of the closing date, which would have expired on June 2,2019. However, in July 2018, the Company obtained the required number of waivers necessary to eliminate theseparticipation rights. In September 2016, the Company completed a registered direct offering. In this offering, the Company issued directly to aninstitutional investor 5.0 million shares of its common stock and warrants to purchase up to 5.0 million shares of commonstock. The common stock and warrants were sold in units, with each unit consisting of one share of common stock and awarrant to purchase one share of common stock. Each unit was sold to the investor in this offering at a negotiated price of$0.75 per unit generating gross proceeds of $3.75 million. In connection with the offering, the placement agent received a6% commission totaling $225,000 and 150,000 warrants with an exercise price of $0.9375. The expiration date of thesewarrants is September 1, 2021. At issuance, these warrants had a value of $89,000 and were accounted for as equity-basedwarrants. The placement agent warrants provide for cashless exercise, which the placement agents may elect if there is noeffective registration statement. The Company also incurred expenses related to legal, accounting, and other registrationcosts of $113,000. The investor warrants had an exercise price of $1.00 per share and were immediately exercisable with a term of five yearsfrom issuance. In addition, the investor warrants included a provision for an adjustment to the exercise price upon subsequentissuances of common stock by the Company at a price less than the warrant exercise price and the investor was entitled topurchase additional shares, such that the aggregate purchase price of $5.0 million for the warrant shares remained unchanged.The investor warrants also included a provision for redemption at the Black-Scholes value at the request of the holder upon achange of control. Based on these derivative features, these warrants were accounted for as a liability at fair value under ASC480 “Distinguishing Liabilities from Equity”. On the date of issuance, these warrants were valued at $4.1 million. The sharesand the warrants were offered and sold pursuant to the Company’s shelf registration statement on Form S-3 which wasdeclared effective by the SEC in January 2014. The Form S-3 expired in January of 2017 and the Company filed a new FormS-3 in April 2017. There was a participation right of 30% for any proposed or intended issuance or sale or exchange of securities being offereduntil the first anniversary of the closing date, which expired on September 1, 2017. The Company’s net cash proceeds from the registered direct offering were $3.4 million. When the additional non-cashcharges of $4.2 million related to the 5.0 million investor warrants and the 150,000 placement agent warrants were offsetagainst the net cash transaction proceeds, this exceeded 100% of the proceeds so the Company was required to take theadditional cost above the transaction proceeds and recognize a loss on the day of the transaction. The loss on the transactionwas $804,000 and was included in derivative loss on the statement of operations. F-18 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOn March 27, 2017, the Company entered into a Waiver and Consent Letter Agreement with the investor from the September2016 registered direct offering, amending the terms of the warrants previously issued. Under the Waiver and ConsentAgreement, the investor waived the right to have the warrant exercise price reduced and the number of shares of commonstock underlying the warrant increased in the event the Company secures any financing, including debt, which includesissuing or selling shares of common stock for a price per share less than the warrant exercise price. The investor also waivedthe prohibition on the Company’s ability to issue or sell shares of its common stock, options or convertible securities at aprice which varies or may vary with the market price of the common stock or pursuant to an equity credit line or similar “at-the-market” offering. The waivers are permanent. In return, the Company agreed to reduce the exercise price of the warrantsfrom $1.00 to $0.40 and to not issue or sell any shares of its capital stock for a period of 10 trading days following theexecution of the Waiver and Consent Agreement. All other terms of the warrants remained the same. Based upon theamendment to this warrant agreement, the Company recognized a non-cash derivative gain of $1.1 million during the quarterended March 31, 2017. Controlled Equity OfferingIn February 2016, Ampio entered into a Controlled Equity Offering Sales Agreement (the “Agreement”) with a placementagent to implement an “at-the-market” equity program under which Ampio, from time to time may offer and sell shares of itscommon stock having an aggregate offering price of up to $25.0 million through the placement agent. The Company has noobligation to sell any of the shares and may at any time suspend sales under the Agreement or terminate the Agreement inaccordance with its terms. The Company has provided the placement agent with customary indemnification rights. Theplacement agent will be entitled to a fixed commission of 3.0% of the gross proceeds from shares sold. No shares were sold under the Agreement during fiscal 2018 or fiscal 2017.Common Stock Issued for ServicesThe Company issued 17,241 and 62,478 shares of common stock valued at $60,000 for non-employee directors as part oftheir director fees for fiscal years 2018 and 2017, respectively. Note 8 – Equity InstrumentsOptionsIn 2010, the Company’s shareholders approved the adoption of a stock and option award plan (the “2010 Plan”), underwhich shares were reserved for future issuance under restricted stock awards, options, and other equity awards. The 2010 Planpermits grants of equity awards to employees, directors and consultants. The shareholders have approved a total of11.7 million shares reserved for issuance under the 2010 Plan.During 2018, the Company granted 285,333 options at a weighted average exercise price of $0.48 to officers, employees anddirectors. Of the options granted, 195,333 options vested immediately while 90,000 options vest monthly over thesucceeding twelve months. Former employees exercised a total of 409,666 options with a weighted average exercise price of$2.06. The Company received $636,400 as of December 31, 2018 related to these option exercises. A total of 3,334 optionswere forfeited and 1,693,333 options expired as of December 31, 2018.During 2017, the Company granted 1,581,334 options at a weighted average exercise price of $0.66 to officers, employeesand directors. Of the options granted, 638,000 options vested immediately while 943,334 options vest over a one to three-year period. A total of 66,667 options were exercised at a weighted average exercise price of $0.51 by employees. TheCompany received $34,000 as of December 31, 2017 related to these option exercises. During 2017, the Company had1,443,334 options that were forfeited.F-19 SMSource: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table summarizes the Company’s stock option activity: Weighted Weighted Average Number of Average Remaining Aggregate Options Exercise Price Contractual Life Intrinsic ValueOutstanding December 31, 2016 7,175,832 $3.64 4.99 $ —Granted 1,581,334 $0.66 Exercised (66,667) $0.51 Forfeited (1,443,334) $4.01 Expired or Cancelled — — Outstanding at December 31, 2017 7,247,165 $2.87 5.16 $12,739,512Granted 285,333 $0.48 Exercised (409,666) $2.06 Forfeited (3,334) $1.02 Expired or Cancelled (1,693,333) $3.92 Outstanding at December 31, 2018 5,426,165 $1.99 4.89 $ —Exercisable at December 31, 2018 4,984,497 $2.11 4.57 $ —Available for grant at December 31, 2018 4,366,145 Stock options outstanding at December 31, 2018 are summarized in the table below: Number of Weighted Weighted Average Options Average RemainingRange of Exercise Prices Outstanding Exercise Price Contractual Lives$0.48 - $2.00 3,293,423 $0.82 5.86$2.01 - $5.00 1,750,000 $3.07 3.24$5.01 - $8.93 382,742 $7.13 4.22 5,426,165 $1.99 4.89 The Company computes the fair value for all options granted or modified using the Black-Scholes option pricing model. Tocalculate the fair value of the options, certain assumptions are made regarding components of the model, including theestimated fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expectedoption life. Changes to the assumptions could cause significant adjustments to the valuation. The Company calculates itsvolatility assumption using the actual changes in the market value of its stock. The Company adopted ASU 2016-09 in fiscal2017 and no longer estimates a forfeiture rate. Instead, forfeitures are recognized as they occur. The Company’s historicaloption exercises do not provide a reasonable basis to estimate an expected term due to the lack of sufficient data. Therefore,the Company estimates the expected term by using the simplified method. The simplified method calculates the expectedterm as the average time to vest and the contractual life of the options. The risk-free interest rate is based on the U.S. Treasuryyield in effect at the time of the grant for treasury securities of similar maturity. The Company has computed the fair value forthe options granted and modified, which totaled $347,000 for the period ended December 31, 2018, using the followingassumptions: Years Ended December 31, 2018 2017 Expected volatility 101% - 201%34% - 113% Risk free interest rate 1.86% - 2.96%1.16% - 2.13% Expected term (years) 0.3 - 5.5 0.5 - 6.5 Dividend yield 0.0%0.00% On October 1, 2018, the Compensation Committee approved a one-time option repricing where the exercise of each relevantoption (as defined below) was amended to reduce such exercise price to $0.75 per share. “Relevant Options” are certainoutstanding stock options as of October 1, 2018 (vested or unvested) to acquire shares of the Company’s Common Stock thathave exercise prices above $0.75 per share; provided, however, that the maximum dollar value of the repricing for anyindividual will not exceed $500,000 (with such value calculated by multiplying (i) the differenceF-20 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsbetween the initial exercise price and $0.75 by (ii) the number of options being repriced). The Company has computed thefair value for the one-time option repricing, which totaled $97,000 for the period ended December 31, 2018, using thefollowing assumptions: Assumptions for one-time option repricing At Date of RepricingExpected volatility 215.48%Risk free interest rate 2.60%Expected term (years) 1.0 Dividend yield 0.0% Stock-based compensation expense related to the fair value of stock options was included in the statements of operations asresearch and development expenses and general and administrative expenses as set forth in the table below. The Companydetermined the fair value as of the date of grant using the Black-Scholes option pricing model and expenses the fair valueratably over the vesting period. The following table summarizes stock-based compensation for the years ended 2018 and2017: Years Ended December 31, 2018 2017Research and development expenses Stock-based compensation $191,000 $298,000 General and administrative expenses Common stock issued for services 60,000 60,000Stock-based compensation 253,000 447,000 $504,000 $805,000 Unrecognized expense at December 31, 2018 $68,341 Weighted average remaining years to vest 1.00 WarrantsIn connection with the August 2018 confidentially marketed public offering, the Company issued warrants to purchase anaggregate of 20.0 million shares of common stock at an exercise price of $0.40 with a term of five years. Due to certainderivative features, these warrants are accounted for under liability accounting and are recorded at fair value each reportingperiod. As of December 31, 2018, these warrants had a fair value of $5.2 million. Significant assumptions as of December 31,2018 and at issuance were as follows: Assumptions for warrants issued August 13, 2018: December 31, 2018 At Issuance Exercise Price $0.40 $0.40 Volatility 129.8% 121.8%Equivalent term (years) 4.62 5.00 Risk-free interest rate 2.50% 2.75%Number of shares 15,600,000 20,000,000 F-21 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn connection with the June 2017 registered direct offering, the Company issued investor warrants to purchase an aggregateof approximately 11.0 million shares of common stock at an exercise price of $0.76 with a term of five years. Due to certainderivative features, these warrants are accounted for under liability accounting and are recorded at fair value each reportingperiod. As of December 31, 2018, these warrants had a fair value of $1.7 million. Significant assumptions as of December 31,2018, December 31, 2017 and at issuance were as follows:Assumptions for warrants issued June 2,2017: December 31, 2018 December 31, 2017 At Issuance Exercise Price $0.76 $0.76 $0.76 Volatility 134.1% 102.4% 94.6%Equivalent term (years) 3.42 4.40 5.00 Risk-free interest rate 2.47% 2.14% 1.71%Number of shares 6,093,582 7,605,851 10,990,245 In connection with the 2016 registered direct offering, the Company issued to an investor warrants to purchase an aggregateof 5.0 million shares of common stock at an exercise price of $1.00 with a term of five years. In March 2017, the exerciseprice of these warrants was reduced from $1.00 to $0.40. Due to certain derivative features, these warrants were accounted forunder liability accounting and were recorded at fair value each reporting period. As of December 31, 2018, no fair value wasrecorded as these warrants were exercised in full during the first quarter of 2018. The combined value for the warrant liability at December 31, 2018 is $6,933,000. See Note 4 for additional informationregarding the warrant derivative liability.During the 2017 registered direct offering, the Company issued to the placement agent warrants to purchase an aggregate of879,000 shares of common stock at an exercise price of $0.76 with a term of five years. These warrants were accounted for asequity-based awards. See Note 7 for additional information. These placement agent warrants were valued using the Black-Scholes methodology. The significant assumptions at issuance were as follows:Expected volatility 94.6%Risk free interest rate 1.71%Expected term (years) 5.0 Dividend yield 0.0% The following table summarizes the Company’s warrant activity: Weighted Weighted Average Number of Average Remaining Warrants Exercise Price Contractual Life Outstanding at December 31, 2016 5,648,576 $1.20 4.28Warrants issued in connection with the registered direct offering 11,869,464 $0.76 4.42Warrants exercised (4,185,797) $0.72 Outstanding at December 31, 2017 13,332,243 $0.73 4.01Warrants issued in connection with the confidentially marketed publicoffering 20,000,000 $0.40 4.62Warrants exercised (10,550,476) $0.42 Warrants expired (498,576) $3.24 Outstanding at December 31, 2018 22,283,191 $0.51 4.25 During December 2018, the Company entered into a Warrant Exercise Agreement (the “Exercise Agreement”) with certainholders of the warrants (the “Exercising Holders”) from the August 2018 confidentially marketed public offering, which theExercising Holders owned warrants exercisable for 5,950,000 shares of common stock. Pursuant to the Exercise Agreement,the Exercising Holders and the Company agreed that the Exercising Holders would exercise their warrants with respect to4,225,000 shares of common stock underlying such warrants for a reduced exercise price equalF-22 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsto $0.30 per share. The Company received proceeds totaling approximately $1.3 million as of December 31, 2018 from theexercise of the warrants by these Exercising Holders. In addition to the warrants exercised above, the Company had several other warrant exercises. The Company issued 175,000shares of common stock from the exercise of investor warrants with an exercise price of $0.40 from the 2018 confidentiallymarketed public offering. The Company also issued 1,511,999 shares of common stock from the exercise of investor warrantswith an exercise price of $0.76 from the 2017 registered direct offering. In addition, the Company issued 4,500,000 shares ofcommon stock from the exercise of investor warrants at an exercise price of $0.40 from the 2016 registered direct offering.After this warrant exercise, the Company no longer has outstanding $0.40 warrants from the 2016 registered direct offering.The Company received proceeds totaling approximately $3.0 million as of December 31, 2018 related to these investorwarrant exercises. The combined proceeds for the investor warrant exercises at December 31, 2018 is approximately $4.3 million. In July 2018, 138,477 of the placement agent warrants from the 2017 direct offering were cashlessly exercised, whichresulted in the issuance of 103,148 shares of common stock.In March 2017, the Company modified 498,576 of its outstanding warrants which extended the expiration until June 30,2018. The $75,000 additional expense related to this modification was recognized in the quarter ended March 31,2017. These warrants all expired as of June 30, 2018.In March 2017, the Company modified the 5.0 million warrants issued in conjunction with the Company’s September 2016registered direct offering with an original strike price of $1.00 down to $0.40. The $1.1 million gain related to thismodification was recognized in the quarter ended March 31, 2017. See Note 7 for additional information. As noted above,these warrants were exercised in full during the first quarter of 2018.Note 9 – Related Party TransactionsSponsored Research AgreementThe Company entered into a sponsored research agreement with Trauma Research LLC, an entity controlled by one of theCompany’s Directors and former Chief Scientific Officer (“CSO”), Dr. Bar-Or, in September 2009, which was amended seventimes with the last amendment occurring in June 2017. Under the amended terms, the agreement was terminated effectiveJuly 5, 2017. The remaining prepaid of $252,000 was expensed during the quarter ended June 30, 2017. In conjunction withterminating this agreement, the Company extended the contract for Dr. Bar-Or until July 2018. In July 2018, the Companyextended Dr. Bar-Or’s employment agreement for an additional month. On August 29, 2018, Dr. Bar-Or notified the Companyof his decision to retire from his role as CSO, effective September 30, 2018. Dr. Bar-Or will continue to serve as a member ofthe Board of Directors and the Scientific Advisory Board of the Company.Note 10 – LitigationOn August 25, 2018 and August 31, 2018, two purported stockholders of the Company brought putative class action lawsuitsin the United States District Court for the Central District of California, Shi v. Ampio Pharmaceuticals, Inc., et al., Case No.2:18-cv-07476-SJO-RAO, and in the United States District Court for the District of Colorado, Shaffer v. AmpioPharmaceuticals, Inc., et al., Case No. 1:18-cv-02252-KLM, together, the “Securities Class Actions”. Plaintiffs in theSecurities Class Actions allege that the Company and certain of its current officers violated federal securities laws bymisrepresenting and/or omitting information regarding the AP-003 Phase III clinical trials of Ampion. Plaintiffs assert claimsunder Sections 10(b) and 20(a) and Rule 10b-5 under the Securities Exchange Act of 1934, on behalf of a putative class ofpurchasers of the Company’s common stock from December 14, 2017 through August 7, 2018. The Securities Class Actionsseek unspecified damages, interest, and attorneys’ fees and costs. On October 24, 2018, certain purported stockholders filedmotions to be appointed as lead plaintiff in the Shi case. On November 6, 2018, the Shaffer case was voluntarily dismissed. F-23 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOn September 10, 2018, a purported stockholder of the Company brought a derivative action in the United States DistrictCourt for the Central District of California, Cetrone v. Macaluso, et al., Case No. 2:18-cv-05970-SJO-RAO, alleging primarilythat the directors and officers of Ampio breached their fiduciary duties because of their alleged misstatements and/oromissions regarding the AP-003 Phase III clinical trials of Ampion. On November 16, 2018, the case was stayed pendingproceedings in the Shi case. On October 5, 2018, a purported stockholder of the Company brought a derivative action in the United States District Courtfor the District of Colorado, Theise v. Macaluso, et al., Case No. 1:18-cv-02558-RBJ, which closely parallels the allegationsin the Cetrone case. On November 14, 2018, a purported stockholder of the Company brought a second derivative action inthe United States District Court for the District of Colorado, Lewis v. Macaluso, et al., Case No. 1:18-cv-02932-SKC, whichalso closely parallels the allegations in the Cetrone case. On December 19, 2018, the court consolidated the Theise and Lewisderivative actions, and the consolidated action is captioned In re Ampio Pharmaceuticals, Inc. Stockholder DerivativeLitigation, Case No. 1:18-cv-02558-RBJ. On January 3, 2019, this consolidated derivative action was stayed pendingproceedings in the Shi case. The Company believes these claims are without merit and intends to defend these lawsuits vigorously. The Companycurrently believes the likelihood of a loss contingency related to these matters is remote and, therefore, no provision for aloss contingency is required. Note 11 – Employee Benefit PlanAmpio has a 401(k) plan that allows participants to contribute a portion of their salary, subject to eligibility requirementsand annual IRS limits. The Company does not match employee contributions. Note 12 – Subsequent EventsIn the first quarter of 2019, the Company issued 50,000 shares of common stock from the exercise of investor warrants withan exercise price of $0.40. The Company received $20,000 during the first quarter of 2019 related to investor warrantexercises.On January 2, 2019, the Company awarded 45,454 shares of common stock to each independent director at a price of $0.44per share equivalent to $20,000, which was the closing price of our common stock on the date of grant. F-24Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in Ampio Pharmaceuticals, Inc.’s Registration Statements on Form S-8 (File Nos. 333-186077, 333-181626, 333-175161, and 333-194428) and Form S-3 (File No. 333-217094) of our report dated March 18, 2019, relating tothe financial statements, which includes an explanatory paragraph regarding the substantial doubt about Ampio Pharmaceuticals, Inc.’sability to continue as a going concern, which appears in this Annual Report on Form 10-K. /s/ Plante Moran PLLC March 18, 2019 Denver, Colorado Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 23.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in Ampio Pharmaceuticals, Inc.’s Registration Statements on Form S-8 (File Nos. 333-186077, 333-181626, 333-175161, and 333-194428) and Form S-3 (File No. 333-217094) of our report dated March 6, 2018, relating tothe financial statements, which includes an explanatory paragraph regarding the substantial doubt about Ampio Pharmaceuticals, Inc.’sability to continue as a going concern, which appears in this Annual Report on Form 10-K. /s/ EKS&H LLLP March 6, 2018 Denver, Colorado Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 31.1CERTIFICATIONI, Michael Macaluso, certify that:1. I have reviewed this Annual Report on Form 10-K of Ampio Pharmaceuticals, Inc. for the year ended December 31, 2018;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, considering the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the registrant is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reportbased on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing theequivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. /s/ Michael Macaluso Michael Macaluso Chief Executive Officer Date: March 18, 2019 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 31.2CERTIFICATIONI, Thomas E. Chilcott, certify that:1. I have reviewed this Annual Report on Form 10-K of Ampio Pharmaceuticals, Inc. for the year ended December 31, 2018;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, considering the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the registrant is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reportbased on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. /s/ Thomas E. Chilcott Thomas E. Chilcott Chief Financial Officer, Secretary and Treasurer Date: March 18, 2019 Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32.118 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Ampio Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the year endedDecember 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (“Report”), each of the undersigned officersof the Company, certifies to his knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 (Section 906), the following:(1) The Report fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company. /s/ Michael Macaluso Michael Macaluso Chief Executive Officer /s/ Thomas E. Chilcott Thomas E. Chilcott Chief Financial Officer, Secretary and Treasurer Date: March 18, 2019 This certification accompanies the annual report on Form 10-K to which it relates, is not deemed filed with the Securities andExchange Commission and is not to be incorporated by reference into any filing of Ampio Pharmaceuticals, Inc. under the Securities Act of1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K),irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by section906 of the Sarbanes-Oxley Act of 2002 has been provided to Ampio Pharmaceuticals, Inc. and will be retained by Ampio Pharmaceuticals,Inc. and furnished to the Securities and Exchange Commission or its staff upon request.Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: Ampio Pharmaceuticals, Inc., 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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